In a recent study, nearly 31 percent of business owners polled claimed that increasing their sales was a top priority. When first starting a business, you will need to make a number of important decisions. Rushing through these important decisions can put you at a disadvantage when it comes to acquiring customers and increasing your bottom line.
One of the most important factors to consider when starting a new business is how to properly manage your tax obligations. Failing to focus on providing the IRS with their share of your profits can lead to audits and a number of other problems.
Read below to find out about the most common tax mistakes made by startup business owners and what you can do to avoid them.
Selecting the Wrong Business Structure
Choosing a business structure is no easy task. Some business owners fail to realize that this decision will dictate how their profits are taxed and how much protection their personal assets have. If a business owner wants to protect their personal assets in the event that their business fails or is sued, then setting up a Delaware LLC is a good idea.
The best way to find out more information about the various business structures on the market is by consulting with a business tax attorney. These legal professionals can provide you with in-depth information that will make choosing a business structure much easier.
Failing to Get Professional Help
When first starting a new business, you will need to adhere to a very strict budget. One of the most important things you need to spend money on as a new business owner is hiring an accountant. Trying to handle the financial side of your business without the right amount of experience will usually lead to disaster.
With the help of an accountant, you will be able to focus more on growing your business rather than recording every financial transaction. Before hiring an accountant, you need to find out more about their previous experience.
Take Advantage of Tax Deduction
Not only does the IRS allow you to deduct the cost of starting a business, you can also get deductions for necessary business expenses. These expenses can include everything from work-related travel to office supplies. The key to taking advantage of these deductions is keeping a paper trail of your expenses.
Handing these receipts over to your accountant will allow you to save money when tax time arrives. Tracking all of your expenses and keeping detailed records will help you take full advantage of the tax deductions offered by the IRS.
Accounting Software Can Be Extremely Helpful
Some business owners fail to realize just how beneficial using accounting software like QuickBooks can be. While you will need to avoid using this software in lieu of hiring an actual accountant, it can be helpful when trying to keep track of expenses.
This software will allow you to see where your money is going each month and will also keep track of your tax obligations. If you see that money is being wasted on frivolous things, you need to fix this issue before it gets out of control.
While keeping up with your tax obligations may be time-consuming, it is worth the time and money you invest. The last thing you want is to be audited or fined by the IRS due to negligence