Being a business owner is the stuff the American Dream is made of. You get to be your own boss, generate your own revenue, and have a business and legacy to pass on to future generations. However, what you don’t want to pass on to future generations is tax problems.
There are a lot of tax pitfalls awaiting the unwary entrepreneur, and in this article, we intend to show you how to avoid them. Continue reading for tax tips that will help you minimize tax troubles and remain in good standing with the IRS.
Hire a CPA.
One of the best things you can do to fortify your business against tax problems is to hire a certified public accountant (CPA) to look over your business accounts. Accounting professionals can help you with everything, from budgeting to figuring out your tax liability and helping you find deductibles.
There are different types of financial professionals, and which is best for your company depends on the size of your company and its accounting needs. If your business is small, perhaps a sole proprietorship, a CPA will suffice. However, if your business has more than 50 employees and generates more than a million dollars in revenue, you might need a team of financial professionals and a certified financial executive (CFE) to lead the team and provide internal control.
Learn some accounting basics for your personal development.
Another way you can mitigate tax problems is to spend time learning some accounting basics. You don’t need to attain a professional education in accounting, but taking some individual courses in a different field of study could help you greatly in your business and personal development. Furthermore, your classes will be tax-deductible as they’ll be helping you in your business endeavors.
With online courses, you can learn at your own pace. You can also choose your own field of study and focus on anything, from forensic accounting to how to basic public accounting. With self-study CPE courses, you can become the accountant your company needs.
Save all your financial statements.
When you run a business, keeping immaculate records is essential. It’s vital to maintain the cybersecurity of your financial data and a comprehensive filing system for your hard-copy financial statements, from receipts to bank account statements.
Audits happen in business, which is why it’s important to keep impeccable records. Slicksters have tried “cooking” their books and pleading ignorance only to learn the hard way that the IRS only cares about the tax code and your company’s right standing with it. Keeping track of your financial statements and ensuring the accuracy of your company’s finances will save you a lot of headaches if the internal revenue service decides to take a closer look at your finances.
Work from home.
One of the best ways to save money and get a tax deduction is to work from home. If you have a spare room in your house, set it up as a home office and work from there. As long as it serves as a primary base of operations, you can declare it on your taxes and receive a deduction. The amount of your deduction is based on the size of your office and your home’s utility bills.
Tax problems have brought down a lot of businesses and their owners. One of the biggest myths in businesses is that you must be doing crooked business if you have problems with the IRS. However, a lot of honest business people have suffered for their lack of knowledge of how to manage their taxes. Unfortunately, ignorance doesn’t work as an excuse when you owe the federal government.
Some of the best ways to minimize your chances of tax troubles are to save your financial statements, hire a CPA (or CFE depending on the size of your company), and take some individual courses on accounting. These tips should help you avoid audits and keep you in good standing with the IRS.