Tax doesn’t have to be taxing – or so they say. But the truth is that for startups, tax is no laughing matter. In fact, paying tax can be stressful, even at the best of times. Here are some of the do’s and dont’s for a successful tax year.
Do Know Your Industry
If you want to know everything you can about tax, it’s important to join a trade association. Trade associations in your industry will often share knowledge. This includes valuable information on how to save on tax. Different states have different rules. But you may be able to save money on fuel, uniforms and stationery.
Do Make Payments On Time
Making your tax payments on time is essential if you want to be left alone by the tax authorities. However, many small businesses leave it too late or don’t pay at all, often because they can’t afford it.
If you find yourself in this position, it’s the perfect time to take out a small business loan. Small business loans aren’t just for buying new equipment or expanding product lines. They’re also there to help small businesses make tax obligations that could not otherwise be paid on time.
Do Talk To Your Accountant
Many small businesses see their accountant as a necessary cost. But given how complicated tax law is, they’re better viewed as an investment. Accountants know the tax code inside out. Because of this, they’re often able to save you a lot more money than they cost in the long term. Many accountants specialize in bringing tax bills down. So not only to do you avoid doing the paperwork yourself, you save money to boot.
Don’t Get Disorganized
Almost all businesses have an accountant. That’s something that’s taken for granted these days. But too many small businesses think that their accountant can do everything for them. They can’t. Companies still need to collect receipts to claim back on expenses. And they need to keep copies of all transactions made through the company. Accountants won’t be able to find extra savings if your business expenses are disorganized. Plus, they’ll charge you higher fees.
Don’t Treat Your Business As A Piggy Bank
We all want our businesses to make money. But some people treat their businesses as a piggy bank. They take money from them in a rather unsophisticated way. And as a result, they end up paying more tax than they need to.
Remember, business tax tends to be a lot lower than personal income tax over a certain threshold. So sometimes it’s worth keeping more money in the firm. This money can then be used to make payments in-kind to you and other business owners. Things that can be paid in-kind might include a company car or office equipment.
Do Read Up On Deduction
Small businesses can get tax deductions on all sorts of different items, from travel costs to tech purchases. But there are some strict rules about which items qualify and which don’t. Read up on specific expenses to find out whether they are liable for deductions.