So are you missing out on major
tax deductions you’re entitled to. Small business owners, self-employed workers
and independent workers can write off many legitimate business expenses
immediately, reducing the amount of income on which they pay taxes. According
to Mike Piper, a CPA who writes about investing at ObliviousInvestor.com the
errors are basic and easy to avoid.
So let’s discuss couple of simple
rules to maximize money while staying on IRS’s good side:
1. Avoid
doing IT alone:
Yes we are all aware about the
self made entrepreneurs and the pride they take in doing it, but taxes are one
area where it is advisable to take considerable advice and professional help.
2. Pay
Quarterly taxes:
It happens. Many first time
business owners forget to pay estimated quarterly target the first time they
have self employment income. But do take an accountant help to pay each quarter
and don’t forget to factor any state, country taxes you may owe.
3. Prepare
separate Business and Personal expenses:
Understandably, first time
business owners are famous for doing this. And at end of the year the
accountant has to sort it all through which jacks up the task of tax
preparation. Keep separate credit accounts for business to avoid any future discrepancies.
4. Rise
beyond classic IRA:
For years I have contributed
to a personal IRA, with its limited contribution but then I found out
individual 401(K). Annual contribution limits are much higher and you can make
401(K) contributions after-tax income.
5. Form
the Right type of corporation:
A lot of entrepreneurs have
benefitted forming an S Corporation or choosing S Corp taxation rules for their
LLC. With an S Corp you can set up a regular payroll and make monthly payments
to the IR subject to payroll taxes. You can save thousand dollars deciding how
much you want to spend on yourself.
6. Stop
thinking and do it:
I know like myself there are many
more who do not like taxes but they have to pay. File your return anyway, then
complete Form 9465 to set up a payment plan for the rest.
Till then file taxes and play safe for your business and don't forget to come back to the same place for more interesting blogging.
Thanks for providing useful advice. You have suggested one important point that person should avoid planning taxation themselves. I completely agree with your point as one small mistake can place you in trouble and will have to spent more money.
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