Running your business means you have to make many decisions about when, where, and how you are going to spend your time and money. It is a balancing act and one that can be delicate. It is also hard to see in the future and know what you should do now that will pay off later. One area that you can be pretty sure that a decision now can benefit you later - or haunt you - is your taxes! You have so many things to do on a daily basis, and you may be doing most of your accounting work too. Assuming that you’ve gotten everything in your books correctly, did you anticipate your tax filing when you made your financial decisions during the year? Did you record them correctly? Do you know the current tax regulations and the best way to file your expenses, depreciation, loans, and other business expenses? This is where the services of a Certified Public Accountant (CPA) are indispensable!
One of the areas where mistakes are commonly made by a new small business is relative to their start-up costs. If you didn’t consult a CPA as you were setting up your business, tax time is definitely the time. Despite what you may of have been told, you can’t deduct all your start-up expenses immediately! Besides requiring at least one sale to occur, your expenses are deducted over a 15-year term. There are exceptions, however, if your total expenses do not exceed $50,000. Do you know what they are? Consult a CPA to find out! They will also likely advise you that you should wait two or three years to take the deduction. Isn’t it worth a call to find out why?
Selecting Your Business Structure
This is one of the first decisions you made, it will definitely affect your taxes - and you didn’t consult a CPA. What now? While you are probably not going to do anything in the current tax year, a CPA can help you minimize any excess costs while helping you transition to the correct form for your business and your situation.
One of the biggest areas where small businesses get in trouble is with 1099 employees. First, you have to classify your employees correctly. If you call somebody an independent contractor, you have to make sure they meet the requirements and you have to manage them correctly. If you set their work schedule, their tasks, and supply their equipment they should be classified as an employee. This means paying all the required employee taxes. In addition, for those employees who do work independently as 1099 contractors, you have to remember to send out IRS Form 1099-MISC for any services that amount to over $600.00 - and for many other types of payments! You have to send a copy to the IRS and the person who you paid. When it comes time to fill out the forms at the end of January is not the time to find out you need W-9 forms and information from your contractors!
You may want to save money and handle your own taxes, but there are hazards. You will also spend significant time trying to figure out how to do it correctly, time you could spend on other things. Not to mention worrying if you filed your taxes correctly. Hiring a CPA to help you review your taxes, your company, books and operations for tax implications may sound expensive. But you don’t need a full-time CPA, either. Hiring a contract accounting firm like CustomOne CFO & Controllers, you can get cost-effective and efficient part-time CPA services. To explore contract CPA services, contact CustomOne CFO & Controllers and ask for information on their services. The money you save by eliminating tax mistakes could easily pay for the services and increase your profits!
Why your business needs an accountant