How to Take Advantage of Hiring Your Kids to Save Thousands in Small Business Taxes – Read these tips

Owning your own business gives you an opportunity to write off many of your everyday expenses including money used to take care of your kids! Yes..as long as your expenses relate to running your business, it can be turned into a legitimate business tax deduction.

As an entrepreneur or  small business owner, you have the tax advantage of hiring your child in your business (or your children if you have more than one) and you can deduct the wage you pay them on your business tax returns. If your child(ren) are between the ages of 5 and 18 (in some cases up to age 21), you can hire them as a business helper and pay them a wage. Set up a real payroll type of system for paying them where you keep track of their pay dates and their rate of pay etc, along with the number of hours worked and I would also recommend keeping a brief work diary of the tasks they performed. It is not necessary to use a payroll company for this arrangement.

 

You then have them take their paycheck and deposit into their bank account (even if this is a custodial checking account with your name on the account)…let them deposit their paycheck and use those funds to pay for items like part of their private education, Summer camp, clothing, footwear, transportation to school, lunch money, outings with friends, teen activities, etc. If you are a Sole Proprietorship (a/k/a/ DBA “Doing Business As”) or a single-member LLC or Partnership, you will not be required to withhold social security or Medicare taxes. Also note that they will not be required to file an income tax return as long as you keep them under the “minimum threshold required to file income taxes” (every year this amount changes, so always be sure to check on the IRS website). Allowing your child to use their own money to pay for these sort of expenses, will also teach your child a better set of money skills from a young age including starting and building their savings account and budgeting (which I know far too many of us had wished we learned these skills sooner rather than later).

As an example, for tax year 2016, the minimum income required for a Single taxpayer to file income taxes is $10,350…let’s say you pay your 16 year old a wage for the year of $8,000, your 16 year old will not be required to file a tax return AND you get the huge $8,000 tax deduction on your business tax return. It is always best to operate your business in an audit-proof way so make sure you actually issue your child a W-2 every year and properly file it with the IRS. The beauty of this “hire your kid” smart tax strategy is that you can do this even if you have more than one child.

The rules change slightly if you run a Corporation such as an S-Corp or C-Corp. In this case, you will have to withhold the proper taxes from your child’s pay and even have a Form W-4 on file for your child employee. But your child will still not be required to file an income tax return as long as you keep their wage under the minimum filing requirement. (Please note that this post is only referring to wage earnings you pay your child from your business…in a case where you child has Investment earnings above the Kiddie Tax Threshold, that is a different topic).

If you are looking for more info on choosing the right business entity for you, CLICK HERE to check out my prior blog post on that topic.

Of course “how deep” you want to go into covering all bases is totally up to you but it is perfectly okay if you want to prepare an actual job description to keep on file in your child’s personnel file. Of course this can also be digitally stored if you maintain a paperless office. You can also keep an annual performance review on your child to measure their performance. Imagine the early lessons your child will learn when it comes to work ethics.

Being a small business owner and hiring your own children is just one of the many smart tax strategies I teach my clients. If you are interested in signing up for my Entrepreneur Services, I have short term or long term packages where you get the opportunity to directly communicate with me and receive my guidance, business coaching and mentoring that will help you become a tax savvy entrepreneur (which is the only kind of entrepreneur to be) or learn how to brand and market your business more effectively and take your business to the next level.

What Entrepreneurs Should Know About Intellectual Property

Modern technology has made it so much easier to get your materials out there. You can share ideas and pictures with the whole world and use it to make money.  But just as it’s easier to share, it’s also easier to steal.  That’s why it’s important to know the laws and protect yourself.

Before we talk about the laws behind intellectual property, we should probably talk about what intellectual property is. Intellectual property is anything that comes out of your head, whether it be an idea, writing, art, or a picture.

Just because someone can reproduce what you make doesn’t mean it’s legal for them to do so. Intellectual property can usually be divided into four categories: patents, trademarks, copyrights, and trade secrets.

While you’ve likely heard all these terms, here’s a quick breakdown of exactly what they mean.

* Copyright. This protects items that are produced by the imagination, but are tangible, like books and songs. To be protected, you must apply for a copyright, which requires you to fill out forms, pay a fee, and provide a copy.

A current copyright lasts 78 years after the author’s death. This is how families still make money off of their relatives after they pass away.  Courts can impose severe financial penalties if a copyright is violated. Visit the U.S. Copyright Office here.

* Trademark. This protects names and logos that identify a specific brand.  They keep people from getting confused between two products.  While many things can be trademarked, general terms and images cannot.  You can apply for local trademark protection through your state, but you can get better protection federally.

* Patent. These are used to protect inventions and processes that someone creates.  The idea is that they reveal how to make the product, and the government prevents other people from making it in exchange.  A patent lasts generally 20 years, but can also take a long time to get one.  The application process is more extensive than the others and should include a detailed description of how to make the item.  A patent also gives you the ability to sell the right to produce the item you’ve patented.

To apply for Trademarks and Patents and get more general info, visit the U.S. Patent and Trademark Office here.

* Trade Secrets. These are things a business uses that it needs to keep secret in order to succeed.  It might be a secret recipe or how a product is made.  Whether or not something can be protected as a trade secret is decided in court and is based on a variety of factors, but most importantly, whether something is public knowledge or not.  There isn’t a time limit to this kind of protection, but it can be voided if information is revealed to others.

Just because something fits into one category, doesn’t mean it can’t fit into another. They often overlap, which can make it more difficult to protect yourself.

Just because a law exists, doesn’t mean that there won’t be people out there who will not break them. Unfortunately, the lines can get even more blurred when your business is online.  Knowing your rights is the first step and then taking appropriate measures to protect your content will lead you in the right direction.

8 Tips About Recordkeeping You Can’t Afford To Miss

Record keeping is an essential function of business success. If you don’t keep accurate records you could end up wasting money in many ways – including paying too much taxes, or paying late fees due to forgetting to pay an invoice. Not only that, if you have client files that aren’t kept accurately, you may lose their information and work will become very inefficient. Good records also serves as support for items reported on your tax returns…in case you are ever questioned by IRS or your State Department of Revenue.

Here are 8 Tips…

 1. Touch Paperwork Once – If you have a good system set up, the moment you get the information (whether paper or computerized) you can process it and not think about it again. Plus, if you ever need that information again, it’ll be simple to find within seconds. Personally speaking, I have implemented a very useful program called Shoeboxed.com. Shoeboxed enables you to mail them your paper receipts and they will scan everything in and even categorize your expenses. The reports you can generate through Shoeboxed are accepted by IRS!

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 2. Automate When Possible – The best systems today save a lot of time and effort through automation. A great example of automation is online bookkeeping that’s connected with your bank account. It makes booking entries painless and automatic. There are so many services out there to choose from.

 3. Hire a Professional – While you may think you can do it all yourself, there are some things such as finances that are often better left to professionals. Even a professional organizer might have some great ideas of how to make everything work together easily. Hiring a professional also enables you to focus on other tasks like growing your business.

 4. Create a Process – Anything in your business that can be turned into a systematic process is then able to be ramped up and improved upon. That’s why systems and processes are so important in business, and that includes record keeping.

 5. Choose the Right Software – There is no one-size-fits-all software. You have to know what you need in your business, what features you want the software to have, and whether you have the budget for what you want. Don’t choose the least expensive if it doesn’t offer everything you need and the ability to grow. Of course QuickBooks Online is a very popular but there are more affordable options like WaveApss.com. Also read Money Crasher’s article on 11 Best Online Accounting, Bookkeeping & Invoicing Software.

6. Keep Private Things Private – Your record keeping system needs to consider the level of security you need, based on the type of records that you’re keeping. By law some things have to be secured in a special way in the cloud, and by lock and key when physical. Ensure that you know the rules and regulations for your types of files.

 7. Always Back Up Everything – No record keeping system is complete without a backup. This includes paper files. You must have a copy of everything in a safe place in case of a fire, computer crash or other unexpected disaster. I also recommend scanning records whenever possible and saving them in “the cloud” where you can access your records by Internet through any device. Dropbox.com is very useful for this purpose.

 8. Start Now – Don’t wait until you earn more money, or have more clients, or – well, for anything. Get started from day one with your system and process so that you can perfect it as you build your business.

 The worst thing you can do when it comes to record keeping is to simply not tackle it. You can streamline record keeping, systemize it and make it become second nature if you set it up right from day one.

HERE’S A RESOURCE – IRS has a whole page on their site dedicated to answer your question of “What kind of records should I keep?”

 

 

 

What Business Is Right For You?

What Business Is Right for You?

When you determine you want to start a business, the next step is to find out which type of business is right for you. The way to do that is to participate in self-reflection that is brutally honest so that you can get started on the right foot with the exact right business for you. It can be a very difficult time to choose the right business.

Here are some tips to help you.

* There Is No Such Thing as a Sure Thing – No matter what anyone says, there is no business idea that is a sure thing. That’s why one person can make a pizzeria into a million-dollar business, and the other person goes bankrupt in the first six months.

* Do What You Know or Can Learn – If you start with what you already know and where your resume leads, that is usually best. However, if you really want to change directions, take the time to learn new things instead of jumping into a situation where you have no idea what to do.

* Study Other Businesses – When you get an idea about the direction you want to go, start looking at those businesses that are already successful to find out a common reason why. If you can determine what they’re doing well then you can emulate that later.

* Ensure There Is Sufficient Demand – With any business idea that you have, it’s important to make sure there is enough demand to support your income requirements and needs. This is a mistake people often make when trying to turn a hobby into a full-time income. There just isn’t enough demand. (If you are looking to turn your hobby into a business, see my other blog post here.)

* Develop a Business Plan – When you have zeroed in on something you like, try making a one- or two-page business plan which will force you to analyze every aspect of the idea. The business plan is an essential component of choosing the right business, and people make the mistake of thinking you only do that when you’ve already picked the business.

* Ask for Assistance from Others – If you know people in the field, simply ask them what they’d do differently, better, or if they’d do it again at all. They’re likely to be very honest with you about the mistakes they’ve made and the successes they’ve had if you ask.

* Work for Someone in the Field for a While – One way to learn whether you even like a certain type of business or not is to work in it. Ask people you know to let you volunteer or work for low pay in their business.

* Look for Market Trends – Match your skills with current market trends to see if you can find a good match that excites you. Don’t let this be a substitute for ensuring there is a market for the trend today and in the future, but it’s a good start.

Choosing a business that is right for you takes some work. But, if you do the work before jumping in, you will have that much more chance to experience success with your business idea.

Am I Cut Out For a Home Business

Before you embark on starting a home business, it’s important to do some self-evaluation to ensure that you’re on the right track for your business idea. Being brutally honest is part of the process of getting started. Answer the following to help you make your decision. Don’t hold back; be honest.

1. Are You Self-Motivated? – Are you able to set schedules for yourself and get things done on time without having someone else set the schedule for you? When you work for yourself you are going to have to determine the processes by which things get done. Can you handle doing that? If that’s a weakness for you, can you get help from someone like a business coach?

  1. Discover Your Why – Figure out why you want to start a business. If it’s to be rich, to be able to sit on the beach all day, or to “have more time,” then you’re fooling yourself and you need to find a different type of job. Sure, eventually you may have more control over your time, but when you first start you’ll work harder for free than you’ve ever imagined you could.
  1. Be Realistic – You may not have a boss technically anymore, but depending on what type of business you start, you may suddenly feel like you have many bosses. For example if you become a virtual assistant, you’ll likely have 8 to 10 clients who all think they’re your boss. You’ll have to find a way to balance this fact with your expectations.
  1. List Your Resources – Before starting a business, list all your current resources, whether it’s software and tools or people who can help you. This resource list will help you to ask people to help you, and will help you know what you have going for you right now.
  1. Do You Play Well with Others? – You might think a home business means you don’t have to deal with anyone else, but often times the opposite is true. If you know that you have difficulty with others, you may want to choose a home business to start where you don’t have to deal with people as much.
  1. You’ll Need to Wear Many Hats – When you start a business you may have to be the bookkeeper, the laborer, and the candlestick maker. I personally learned this very early on when I started my own business from home. This is how it is when you own your business; you do what needs to be done at the moment it needs to be done, even if it’s something you hate. Sure, you can outsource but when that falls through, you must do it.
  1. Do You Have Enough Experience? – When you think of business ideas and the type of business you want to start, are you truly experienced enough to do it or should you start at a different level to move up to what you really want to do? For example, if you want to become a Social Media Marketing Specialist and help other entrepreneurs to grow their social media, do you have enough experience helping others grow their social media? Even your own social media accounts can count if you are known to have a lot of interaction on your pages and get a lot of “shares” from others.
  1. Do You Have a Good Relationship with Money? – When it comes to making your own money in a home business, you’ll have to become an expert at money management. Sometimes you will feel as if you’re working for free; other times the money will seem to be on autopilot. Having a good relationship with money and money management is crucial when you’re running a business because it even took me a while to realize that unlike working at a traditional job where all you have to worry about is personal expenses…when you have a business, that is no longer the case. Your earnings will have to cover both personal “and business” expenses.
  1. Do You Understand the Competition? – One aspect of choosing whether you’re right for a home business is to look at your competition. Determine whether or not you can deliver at least as well as them, with your own twist.

Not everyone is cut out for having a home business. Some people need the structure of a place to go each day in order to be successful and that is also okay. But it is imperative that you are real with yourself during your self-evaluation.

How to Turn Your Favorite Hobby Into a Work-At-Home Business

Tips For Turning Your Favorite Hobby Into A Successful Work-At-Home Business

Many of us dream of the possibility of creating a successful business right from our homes, one that is sustainable and we can run without ever leaving the confines of our humble abode. Alas, there are numerous businesses which begin and end with these great ideas each year. But some people have the know-how to create a business, which can effectively be operated from home and they have learned the secrets to doing it profitably.

Some of the most innovative of the work-at-home-business ideas revolve around the craft business. Many people are interested in having a home-based craft business; furthermore, some have been able to parlay this fun activity — which others just see as extracurricular fun — into a business that grows and thrives, increasing in sales each year. Those in the craft business will tell you that having a business sense is imperative, and it is even more important when you run a home-based craft business to love what you do and to let that love show through with each and every project which you complete.

The possibilities for a work-at-home business are endless. Click To Tweet

There are multiple home-based craft businesses that can be created, once you determine that this is something that you really love to do. The possibilities for a work-at-home business are endless, especially when you zero-in on such a wide-ranging area as a home-based craft business. But here are a few that seem to be experiencing the greatest growth, and perhaps one of these ideas will inspire you to take part in the new work-at-home business craze that is sweeping the nation.

One of the most successful ventures that is showing up more and more frequently, particularly among those interested in a home based craft business is that of making homemade jewelry. Whether you have a true designer’s eye or just love to play around, homemade jewelry and the parties you can utilize to showcase your wares, seem to be the rage in numerous communities across the nation. This work at home business is relatively easy to get into, and although startup costs can be a little expensive as you first purchase beading and wiring to make the jewelry, your returns can be phenomenal. (**At least your start up costs are a tax deduction!)

Make sure that when you are pricing your items to take your time and work effort into consideration, as well as cost of materials. Beyond that, most businesses fail because their owners fail to factor in a profit on their hard work, so be certain that you factor in a profit on your business as well.

A great plan for showing off your designs is to have home-based parties, where you can have people either buy your pre-made jewelry items or even give them the option to design their own. You can further offer hostess incentives for those who are willing to showcase a party for you. Having another business allow you to display your goods is an additional fantastic way to showcase those items that you make by hand. These two methods really help get your name out into the community and will serve as positive advertising methods for your craft and home business idea with little to no cost to you.

Any work at home business, when well-planned, can be a dynamic investment, and there are numerous other craft ideas that can really get a business rolling for you. If making jewelry is not for you but you have a flair for design, why not turn this into wreath making or dried floral arrangements? Another vibrant craft business that leads many to great success is the creation of knick-knack items for the home. This includes miniature painted figures and even original paintings and artwork for walls. Identify where your true talents and interests lie and you can certainly create a successful work at home business venture!

Shoppers love to buy items that are creative and original, planned out and produced with care and love. That is why your craft and home business idea can merge to form quite the winning formula for accomplishment. People like to support local artisans — this fact really helps to grow your work at home business.

Use the people that you know to get your name out in the community, and frequent quaint shops, restaurants, and even spas to ask permission to display your wares. Setting up an Etsy shop can also help you sell your crafts. [Here’s an Article that will teach you 7 Steps to a Successful Etsy Start). Take your home based craft business to the community members who care about and will support your cause, and you too can create a work at home business that helps you leave behind the drudgery of the job you do not like and allow you to flourish with the one from home that you love.

Take Advantage of Home Business Tax Deductions…Read These 5 Tips

For most home business owners, tax deductions may be the key that can help put a little extra cash back into your pocket. Tax deductions vary from business to business but it is worth your time to familiarize yourself with some of these common tax deductions.

  1. First…determine if you qualify for a home business tax deduction. A home office is generally defined as  place where you meet with clients, patients, or customers. Or if this part of the house is used exclusively for business purposes…as an example, someone who runs a Gift Basket business might use a spare room for where the supplies are kept and that person may also use this space to build the gift baskets for customers. Most people have a general image that comes to mind when they hear the words “home office”. In reality, tax deductions can apply to a variety of places. Your home office can be a garage, basement, or a studio. If you do qualify as a home business, it is crucial to keep all records, receipts, and paperwork that you have accumulated through the year.

    It will make tax time a much less stressful experience for the home business owner. Do not overlook the small things. This can be as simple as keeping the receipts when you purchase paper, staples, or toner. Any item that is purchaes for your home business is usually considered a tax deduction. This may seem tedious and unimportant but nothing could be further from the truth. You might be amazed when all these little things add up at the end of the year.

  2. Home business deductions can be separated into two categories. The first is for Direct Expenses. These are expenses that are needed for your actual home office. Direct expenses include office furniture, decorating costs, or equipment. The other category is Indirect expenses which are the expenses that must be paid for the entire house. This includes heating, electricity, or mortgage Interest payments, rent, etc. You can deduct a percentage of your business expenses from your indirect costs such as these, because these indirect expenses are shared for  personal reasons too.
  3. Another home office tax deduction to consider are telephone expenses. If you have one telephone line, the IRS is usually not going to believe that you use this only for your home business…but again…because it is a shared expense, you can deduct a percentage. Some home businesses have a second phone line installed, in a case like that, this second line expense is 100% tax deductible.  (This can also apply to your cell phone.)
  4. An overlooked tax deduction for some home business owners are the Meal expenses when they entertain an employee, a customer or a client. Save all your receipts from these business lunches and dinners. It is possible to deduct fifty percent of meal expenses.

    Education expenses can also be a tax deduction if it is required by law to update your skills or if you are trying to enhance your skills for your current position. As an example, some hair stylists and barbers often independently take hair cutting classes or take a class to learn a specific skill. The cost to attend those workshops and any travel involved would be tax deductible.

  5. Most home business owners use a vehicle as a means of transportation for their business. This vehicle can be used for running to the post office, or meeting with a client as well as running other business errands or if you’re a child care provider that uses your car to take the children on outings. Keep a log book in the vehicle or download an app like MileIQ to keep track of the mileage on these auto trips. Vehicles can be vital to run your home business, and over time these kinds of charges can hurt your profits. There are many valuable tax deductions for vehicles, such as car insurance, car repairs and maintenance like car washes.

    Airline fares can be another costly but necessary aspect for home business owners. The IRS does allow your trip expenses as another tax deduction.

As you can see, home business owners have a  variety of options when it comes to tax deductions. Remember to keep records of all your home business activities and consult with a tax professional who specializes in working with home business owners in order to get the best deductions for your home business. Remember that not all tax professionals are created the same.

If you are looking for an extensive list of home business and small business tax deductions, you may want to download my Home Business & Small Business Tax Toolkit.

Choosing the Right Business Entity

Choosing the Right Business Entity

When you start up your business you’ll want to figure out your tax-related business identity. There are a few choices depending on where you live. In the USA you can choose to

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be a sole proprietor, partnership, a limited liability corporation (LLC) or a corporation. Each has different rules, regulations and tax consequences. It will depend on your individual business and what works best for you.

Some types of businesses are required to be in a certain category, but a large share of businesses can run as sole proprietors or LLCs easily.

Sole Proprietor

This type of business set-up means that there is just one owner who is totally responsible for everything. It’s the easiest way to start a business, and how most people get started as long as they’re not in a category that requires another entity.

One problem with this type of business is that if something goes wrong and a customer or other person is harmed in some way and brings a lawsuit, they can win your personal funds and even take your home. Taxes are easy in the USA with the schedule C on personal income taxes.

Partnership

If you are running a business with another person, then you may want to form a partnership. You don’t have to in order to run a business with someone else, but it can offer another level of protection for both parties in the event of a disagreement or even a lawsuit. Income taxes are simple and somewhat like the schedule C reporting, with an additional information return filed. This type of business can be difficult at times, but it’s just as easy to set up as a sole proprietorship.

Limited Liability Corporation

Many people like to form LLCs because they have the opportunity to file taxes as a partnership, corporation, or even as a sole proprietorship. The LLC is mostly just to protect individual business owners from personal liability if something goes wrong and a lawsuit happens, or if the business goes under.

Corporation

There are many types of corporations such as an S Corp and an INC. These are the most expensive types of entities to form, and have many requirements such as having a board of directors and paying separte taxes for the business and the owners, and other issues. It is highly recommended that you work with a professional who specializes in these types of businesses so that you can keep compliant with the laws.

The business entity that you choose will make a difference in how you file income taxes and in how you run… Click To TweetIf you are unsure about which type would be more fitting for you, I recommend that you download The Home Business & Small Business Tax Toolkit that I created for unsure entrepreneurs just like you.

 

8 Simple Ideas on How to Have a Successful Home Based Business

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Home businesses are useful, as they let people exercise control over their income by essentially controlling an entire company from the comfort of their home. Anyone can set up a home business, including you. However, before you start a home business, you should read the following tips, as they will give you proper guidance.

1) Check to see what kind of business insurance you need (if applicable). Some states require mandator business insurance. Before you start your business it’s important to check into the cost of it and what your state requires. You want to make sure your business is protected and minimize your risks associated with it. Also, if you own your home, see if your home owner’s policy can be of any help in this area.

2) A great home business tip is to do as much research as you can. There’s always room to grow and by doing research, you’ll have a leg up on your competition. With the right knowledge you can potentially move your business into new areas when there are opportunities.

3) Try to keep regular work hours when working from home. The freedom of a home business can be very convenient, but your body’s clock can take a beating if you change your routine too frequently. Try to keep regular work hours and sleep routines in order to keep your mind and body working at its best.

4) If it makes sense for your audience, emphasize that you are a home business. If most of your customers are moms who work at home, they may appreciate that you are similar to them and not a great big corporation. A home business is preferable to many customers and clients.

5) Get a Post Office box or even a virtual office where you can use a business address. You never want to post your home address online, even in connection to your business. Getting a Post Office box or virtual office address can help you keep your family safe and secure, while also preventing your mail carrier from having to lug around heavier than normal loads of mail and/or package deliveries to your home.

6) If the product you sell from home involve you purchasing large quantities of supplies, try to find a place where you can buy your own supplies wholesale. Wholesale supplies are sometimes only half as expensive as the products you find in a regular retailer. You may have to travel to do this, but the savings an quickly add up for your business. If you cannot travel, try looking online.

7) When choosing a type of home business, make sure that your business will work with your family’s needs. Your family will have a normal schedule that you will have to work around with a home business. If you have a newborn baby, you may be limited to the amount of time that you can spend working for your business.

8) You should make it easy for customers to get in contact with you. Your business website should have an email link available on every single sub-page. This keeps communication front and center, and make it look like you really take care to communicate with customers. It is a simple way to build trust with customers.

As stated before, home businesses let people run a company from their home. A home business can be started by anyone, and with the tips given to you on this blog post, you can take the steps needed to start your own home business, and control your own company from home.

8 Things Every Entrepreneur Should Know About Taxes

8-thingsAs an Entrepreneur or Small Business Owner, your taxes are a direct co-relation to saving money in your business especially because (when not done properly) it can be one of the most expensive costs to running your business. I’m sure you would much rather take your hard-earned tax dollars and invest it in other areas that will help you to “grow” your business.

The goal of my blog is to help the unsure Entrepreneur so in today’s post I am sharing 8 things every Entrepreneur should know about taxes.

  1. Your business structure, whether a DBA (Doing Business As a/k/a Sole Proprietorship), LLC, S Corp, C Corp, etc., will determine the tax rate you will pay because not all business structures are taxed the same. As a matter of fact, this is why it is very important to consult with a business tax specialist who can help you determine which structure would benefit you in the greatest way. You must understand that what’s right for one business, isn’t necessarily right for another.
  2. Your business structure also determines which forms you are required to file. This is one way that obtaining an EIN through the IRS can help you because the confirmation letter you receive after you obtain your EIN will inform you on what IRS forms you are required to file.
  3. If you are an LLC that has “elected to be taxed as a Corp” with the IRS, this does not automatically mean that you will be taxed as a Corp with the State your business is registered in. Remember, if you registered as an LLC with the State, your business will be expected to file a State tax return using forms that relate to being an LLC not a Corp. Do not confuse the two.
  4. If you are planning to register your business as an LLC, you have the option in terms of which State you register in because some states are less expensive than others and some states have very minimal business taxes that will be owed and in some cases, zero taxes will be owed. (But be advised that registering your LLC in a State that you “don’t” officially do business in may also mean that you are required to register as a Foreign LLC in the State your business is physically located in.)
  5. Do not just simply rely on your business tax professional (or DIY tax software) to keep you abreast of everything related to your small business and taxes. I’m not saying you need to become an expert with small business and taxes because trying to make sense of it all can sometimes feel overwhelming but you should at least consider subscribing to email news alerts from the IRS. Staying in tune will at least help you learn about information that you may want to discuss further with your tax professional. [Here is a Link to sign up with their enews alerts.]
  6. Remember that the IRS as well as the State your business is registered in, holds you fully accountable for all of your timely filings and it is your responsibility to keep abreast of all the due dates of the various tax filings that may apply to you. So learn your due dates and place them into your calendar along with a 30 day ahead reminder so you will not have to worry about missing a due date for a payment or specific tax return.
  7. Although keeping up with the bookkeeping and accounting for your business is often a task most Entrepreneurs don’t want to deal with, try to keep it up as close to 100% accurate as possible because this will seve multiple purposes. For one thing accurate accounting and bookkeeping will enable you to run Profit & Loss statements and other financial statements whenever needed (and are always requested in an Audit). It will also prove to the IRS that you are treating your business like a business and are not simply saving receipts. It will also help you to capture every expense so you don’t miss out on important business tax deductions (because so many Entrepreneurs often do). It will also make tax time so muche easierand give you peace of mind. (And if handling this is really that painful or time consuming, outsource it.)
  8. You cannot treat yourself as an Independent Contractor to your own business adn this is often misunderstood and confused by so many entrepreneurs and small business owners. If you are Unincorporated, you pay yourself with what is called an “owner’s draw” and if you are Incorporated, you must pay yourself as an Employee and issue yourself a W-2 just as if you were working for another company.