As a new small business owner, you have a lot to think about. You want a successful business, a positive culture and great employees. And now it’s time to add taxes to that list.
Tax season can be stressful, frustrating, and challenging for a small business owner, but every owner should know about federal income taxes. Understanding your taxes helps you to maximize deductions and prevent liability issues.
Here are 4 things that every new small business owner should know before you get started on your taxes:
- Your legal entity. Each business type has its own benefits and limitations when it comes to taxes. It’s important to know what you are classified as. S corporations offer small business owners the advantage of paying taxes at the shareholder level, while C corporations can deduct a wider range of expenses. Are you a sole proprietorship or a LLC? Do your research. Discover what best suits your company’s needs.
- Your deductions and tax credits. Tax credits and deductions can create new opportunities for your small business. Most states and the federal government use tax credits and incentives to encourage economic development. Many of these tax credits differ by state and are not actively marketed, so you have to know what’s available to you. Depending on your organization’s industry, location, or activities, you will be eligible for different credits, deductions, and opportunities.
- Startup expenses. It’s true: business expenses for starting your small business are deductible! The IRS allows you to deduct a few different startup expenses before you even open the doors to your business. Things like training your employees, analyzing products, locating suppliers and even advertising to potential customers. These expenses differ depending on the industry you’re in, so it’s important to understand what exactly is available to you.
- Dates and deadlines. This may be the most obvious, but most important. Note that this year tax day falls on April 18. You read that right. It’s not on April 15 this year. April 15 is a Saturday, and the Washington D.C. Emancipation Day is being observed on April 17. If you are granted an extension, October 16 is the final day to e-file a 2016 Federal Income Tax Return.
Feeling a little overwhelmed? We’re here to help, and tax credits are our specialty! Let us know how we can help you get the most out of your taxes this year. John Kelly Jersey