Small businesses are an important part of the economy and have a significant impact on their local communities. As such, they need to be aware of the various tax regulations that apply to them. Knowing the right tax advice for small businesses can help them save money and ensure compliance with all applicable laws. This article will discuss the different types of taxes that small businesses must pay, as well as provide tips on how to maximize deductions and take advantage of available credits. It will also cover some common mistakes made by small business owners when it comes to filing taxes so that readers can avoid making costly errors.
Being An Entrepreneur Is Hard Work
No doubt, being a successful entrepreneur will require hard work and dedication. However, the younger generations are no strangers to working several jobs and/or side hustles and still barely making enough money to pay the bills. This is not a comfortable life and will quickly wear anyone down. Comparatively, you will work hard in your own business, but it will feel much more worthwhile. The money will be much more satisfying, and you will be motivated and challenged in a new way.
There is no greater joy than owning and operating your own business. You look over your record-keeping and have a sense of well-deserved pride in your accomplishments of the past year. Then you remember tax season is looming over you like a dark shadow and a knot of worry forms in the pit of your stomach.
It Is Never Too Early To Plan For Taxes
2020 was indeed a year that had a lot of personal challenges for small businesses. However, understanding your tax liability for the coming year is always a good idea and it is never too early to start. There is no reason that taxes need to be a mystery, and you can forecast what you will owe in the coming year.
There Are Other Taxes Besides Income Taxes
Businesses pay more than just income taxes. They include the following:
- Employment taxes on wages paid to employees and to the owner (you).
- Social Security
- Medicare tax
- Federal unemployment tax (FUTA)
Social Security tax is 12.4 percent of all wages paid up to $137,700, with half paid by the employee and half paid by the employer. Medicare is equal to 2.9 percent of wages paid (3.8% on wages over $200,000 ($250,000 for joint returns, $125,000 for married taxpayers filing a separate return), half paid by the employee, and half paid by the employer. FUTA is generally equal to 6 percent of the first $7,000 of each employee’s wages and is paid by the employer. Self Employed owners will have to pay a total amount of Social Security taxes and Medicare taxes since there is no separate employer to pay it for you.
Business Organization
Are you sure that you have chosen the proper business organization? The type of organization has a strong bearing on your tax structure, and you should make sure your organization utilizes the best tax structure for your business needs. Having a small business tax professional look over the Consumer Price Index is a good way to understand your business should be properly structured.
Independent Contractors
Are you confident that your independent contractors have not become employees during the tax year? Did you provide them with the right forms? Businesses need to understand how to properly document all those who have done work for them. The Internal Revenue Service or IRS regulations on such matters can be very perplexing.
Documenting Yourself
Have you, the owner, been taking money out of business to pay personal or professional expenses?
Do you know what to call the money you have taken out? Are you drawing a salary?
Small business accounting can be quite complex and confusing. The wrong guess to any of these tough questions can land you a lot of trouble with the IRS. This is why having the proper small business consultant is crucial to protecting your business from unnecessary taxes and fines.
Never Underestimate Taxes
Tax planning is an important part of running a successful small business. By understanding the tax laws and regulations, you can ensure that your business is operating within the law and taking advantage of all available deductions. As a small business owner, it’s important to stay up-to-date on the latest tax laws and advice to ensure that you are taking full advantage of all available deductions. This article will provide some helpful tips for small businesses when it comes to tax advice.
Small businesses often face a wide range of tax-related issues that can be difficult to navigate. With the right tax advice, however, small business owners can ensure they are compliant with all relevant tax regulations and maximize their profits. This article will discuss the key considerations for small businesses when it comes to taxes and provide advice on how to make sure you are taking advantage of all available deductions and credits.
Tax Implications Can Have Brutal Consequences
It is important to understand the tax implications of your business decisions. Knowing the basics of small business taxation can help you make informed decisions that can save you money and time in the long run. This article will provide an overview of some key tax advice for small businesses, including how to maximize deductions, filing deadlines, and more. With this knowledge, you can ensure that your taxes are properly taken care of and that your business is running as efficiently as possible.
Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur
If you decide to start a business, a tax resale certificate can really save you money on taxes.
In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.
However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.