8 Taxes Taboos You Should Break Today for Your Business’ Sake
08 taxes taboos you should break today for your business’ sake!
For small businesses, improper management of your taxes can mean the death of your business. Depending on your type of business, your tax liabilities will vary. This is why we decide to come up with a treatise discussing the different taxes taboos (fears) and possible ways to overcome them.
Facing the tax examiner
Everyone dreads facing the tax examiner. In most cases, audit fears are usually greater than audit realities. Especially for small businesses and startups that are not used to tax auditing. The remedy, however, is that you should keep good records. Individuals who work themselves do tend to get scrutinized more, so ensure business record keeping is accurate.
Hesitation to incorporate
Many small businesses hesitate to register their business as a corporation, thinking it will increase the payable tax. However, but if you ever want to raise money, registering as a corporation is mandatory. Failing to keep your business up-to-date by incorporating it will end up costing you more money. Informed decisions about incorporation can help you save thousands of dollars in fees and taxes
Deciphering the Tax Code
The National Taxpayer Advocate in one of its annual assessments revealed that deciphering tax code is one of the most serious fears of the taxpayers. No wonder the average taxpayer get overwhelmed and confused easily because of the sheer number of codes and sections involved. However, this shouldn’t weigh you down. As a small business owner, rely on tax software and professionals to get it done.
Spending of Sales Tax
Spending of sales tax is another fear of entrepreneurs and a common problem of small businesses. Often, the sales tax collected in the receipts is deposited along with the business income and considered available cash by the owners. As soon as the due date comes around, the sales tax amount becomes higher than presumed and creates a serious cash-flow problem because there is not enough money to cover the sales tax and a few period later, the business is on the verge of self-destruction. However, you need not fear this; this problem can be tackled by opening a separate bank account to hold sales tax receipts
Paying Employment Taxes
Employment tax deductions are another common pitfall for startups and small business owners. It is important that you completely understand your responsibility as an employer before hiring your first employee because tax deductions for employees are shared between the employee and employer. Before you hire staffs, learn all about tax-related responsibilities as an employer and set up your accounting software with the correct numbers.