Starting a business is both exciting and nerve-racking, but you should be congratulated for striking out on your own! If you have employees, then the success of your business is even more critical because they are relying on you for a paycheck and benefits. Just running the day-to-day business operations is challenging enough, but it can become overwhelming when you throw in the challenges of filing taxes each year. Luckily, there’s a solution to that — work with a reputable and trustworthy tax and accounting firm that can manage the books for you and ensure that you are getting all the right tax breaks. If you are reading this, you’re likely asking what do I need to know about taxes and starting a business? Well, keep reading to learn more.
1. Hire an Accountant
You’ll want to find an accountant that isn’t just available once a year during tax season, but instead works for you year-round to ensure that your income continues to exceed your expenses. At Kedean’s Generation in Union City, NJ we are with you through the whole process and want to be your trusted partner to ensure that you are maximizing your cash flow — not just if the IRS audits you.
2. Separate Personal From Business
Your business is not a hobby and needs to be treated accordingly. This is especially true if you are a sole proprietor. If your business incurred losses year over year that exceed your income, you might be eligible for a deduction. The IRS will assume that you are operating a business if it is profitable in three of the last five tax years.
2. Document, Document, Document
To ensure that your tax return is accurate, you should keep comprehensive and robust records year-round. Failure to keep records could result in you either leaving money on the table via deductions or being audited because you can’t prove the write-offs taken.
3. Keep Business and Personal Expenses Separate
Come tax return time, you will need to file both business and personal tax returns. If you mix your finances, the IRS may have reason to access your personal banking statements to assess the validity of any claims made on your taxes. The best practice for running a business is to open a separate bank account and credit card from your personal usage and not mix the two.
For many, owning a business is the culmination of years of work and dedication. Don’t risk losing it all by failing to file your taxes appropriately. Consequently, reach out to the team at Kedean’s Generation to learn how we can help you with your tax and accounting needs.
Categorised in: Starting a Business