As exciting as starting your business might be, you need to make sure you do it right so that you find the success that you’re looking for. One thing that you should be focusing on is bookkeeping and taxes. These two things will help you more than anything else as you begin this adventure. When it comes to taxes for a small business, there are some things that you want to make sure you’re doing from the beginning. Mark Dicus & Company is here to share some tax tips for those that are starting their small businesses.
This is Not a Hobby but a Business
It is vital that the IRS knows you are a business that should be turning a profit. If you are just doing a hobby, the IRS doesn’t care. However, set an expectation for profit. Make a business plan and document your marketing and management efforts so that they are clearly stated for the government. That can be crucial when tax season rolls around. It is important to note that you need to turn a profit 3 out of five years for the IRS to recognize you as a business.
Keep Financial Records
Bookkeeping is something that is essential to anyone that is starting a small business. You need to have documentation of all of your income and your expenses. Anything that you purchase for your business should be documented so that you can take advantage of it at tax season. If you use your vehicle, make sure you keep a mileage log so that you can deduct those at tax season as well. Keeping records of these expenses as well as any income you make will be crucial at tax season.
Use the Cash Method of Accounting
When you’re a small business owner, you might find that it is easiest to record cash as you receive it. This is something many small businesses making less than 27 million in a three year period use. The cash method means that you are reporting your income as it is billed rather than received. It also means that you are recording expenses when paid. This gives small business owners more flexibility.
Choose Your Business Entity Wisely
Before you feel too pressed to incorporate your business, slow down and think about the impact that will have on your business. When you make the decision to incorporate, you will then be responsible for additional costs like payroll taxes, annual franchise tax and more when tax season rolls around. Without incorporating and continue to file as someone that is self-employed, you can still enjoy the same deductions on your taxes.
Bookkeepers, Accountants & More in Summerlin, North LV, Henderson, Lone Mountain Village & Greater Las Vegas, Nevada
If you aren’t sure what the ins and outs look like as far as taxes for your small business are concerned, you can turn to Mark Dicus & Company to help you get it squared away. We will ensure that you have the records and documents you need. Call us today!