25 May 4 Taxation Tips For The Growing Small Business
When running a small business, you always think of its growth. Of course, your business won’t stay small forever rather it will grow quickly and over time, you would even be looking into hiring new employees. No doubt it is an exciting news but you would want to prepare for the tax implications of running a growing business. As your business grow, you will find yourself dealing with some complex and unique tax situations.
To keep your growing business in the best position in the long term, you just need to follow a few simple steps, take a look at them:
1.Hold on to your tax documents
Typically, small business owners scrap their tax documents just after a couple of years with the assumption that they are not going to need it in the future. But this is a huge mistake and dangerous assumption to make! To a fact, according to law, IRS can choose to audit the returns from anywhere up to six years after they have been filed initially.
It is rather unlikely that you will get audited, however you need to be cautious as it would be really hard to defend yourself in the absence of necessary documentations and paperwork. To be on the safer side, it is recommended to hold onto both electronic and paper copies of your documents and tax returns for at least 7 years.
2.Know about employee tax rules
If you are on the point where you are going to hire some new employees, it is time that you aware yourself of tax rules and regulations related to employees. You would also need your employees to fill a specific form that is W-4. It would allow your employees to basically designate the status of their exemption and how much you need to withhold from their checks for local, state and Federal taxes. Also, you have to pay the unemployment taxes as soon as you hire your first employee.
3.Take the benefit of deductions
A small business owner is liable to some tax deductions. But unfortunately not everyone takes the full advantage of them. Here, you need to work directly with a tax specialist as he/she will help you in tax preparations while making sure that you are taking all the deductions you are entitled to.
Apart from the basic deduction such as new equipment related and business travel related ones etc, there are a number of less obvious ones. These not so obvious deductions are office supplies, software deductions etc., just make sure you have all the documents with you.
4.Pay your taxes quarterly
In certain situations, it is strongly recommended to pay taxes on a quarterly basis. It is even mandated by IRS to pay the taxes quarterly, if small business owners want to owe a thousand dollar or more in taxes, at the end of a year. In the event of failure to pay taxes, you can be subjected to penalties and fines.
There is a lot of things that you need to keep in mind when it comes to the business growth and taxes. By following these steps you can be in a good position as a small business owner.