New and emerging businesses face challenges in filing taxes and managing ta related activities. Small business owners need to have a good understanding of the state, federal, and local taxes that they have to file on a regular basis. The type of taxes that a small business can range from employment, income, sales, and excise.
So let us have a look at the three steps that will help you manage taxes for your small business.
Hire the Right Accountant
Hiring an accountant is a wise option to make sure that all the tax filings and payments are made in the right manner. These are the professionals that can help a small business save time that a business owner spends on tax and booking activities.
An accountant can be hired for the different services, which can range from estimated tax payments to asset depreciation. Making such an investment in the business can contribute to your long term success. Hiring accountants is also advisable as they are constructive partners of your business. These are the people who can be the essential members of your broader support team.
Accounts usually offer varied services to the businesses. However, a small business needs accountants that have special expertise. Therefore, it is best if you make a priority list of all the services that you seek from the accountants. Accountants who have previous experience in a business that is similar to yours is the best choice. The hiring decisions can be made by taking recommendations from the other business owners.
Discuss Tax Liability
Tax liability is usually the first conversation that you must have with your accountant. This will help you understand how to pay your taxes, as each business tax liability is unique and is dependent primarily on four factors. These include business structure, business location, number of employees, and assets. The structure of the business will determine the type of federal income tax that the business has to file. In addition, the tax liability also covers all the business assets such as property, equipment, and stocks. Further, the business that has employees will also have to file taxes related to employment. Similarly, self-employed businesses have to file a self-employment tax.
Avoid Making Common Mistakes
Apart from hiring a professional accountant, businesses can get into a few additional things to stay away from mistakes. For instance, in the case of most businesses have to pay estimated taxes. It is highly recommended that you mark your calendar for these dates to make the tax payments which needs to be paid on a quarterly basis. Also, it is wise to have an accurate business record of all the activities as they help to file tax returns.
Finally, business owners need to be prepared for all the unexpected things. It is highly recommended to have an emergency fund that will help you to cover the unexpected costs that are associated with the business all through the year.
Apart from all this, you need to keep a watch on similar businesses to observe how they are managing taxes.
Source – Forbes