Jun 07 2008
What You Need To Know About Taxes
Every small business owner needs to have a basic understanding of taxes, both state and federal, as well as any local taxes that may apply.
While everyone pays taxes, a small business owner has as a primary goal paying as few taxes as possible. For this reason small business owners need to save receipts for every purchase made. Keep track of all expenses, including the mileage you put on your car for business related trips. It all adds up, and with enough deductions, you reduce your tax bill.
Also, always pay business bills by check or by credit card in order to have a written record of the expenditure. If possible, avoid keeping petty cash in the office. If you must use petty cash, always get a receipt.
Some businesses do some business with others through bartering. This can be great for cash flow, but treat the barter like cash for tax purposes. Trade invoices with the other business and you’ll both come out ahead at tax time.
When it comes close to tax time or when you are planning the new year’s goals, it is always a good idea to look at possible capital expenses. Would you be better off buying a new vehicle, new piece of heavy equipment, or a new computer before the end of the year or after the end of the year? Or would you be better off leasing. Taxes bring up permanent questions such as these, with only temporary answers because the answers change from year to year as the tax code changes.
For this reason having a good tax preparer available as a hired gun is always a good idea. This can be a CPA, or a good non-certified accountant whom you trust. Or a lawyer who specializes in taxes. Generally if you have a very small business a non certified accountant is fine, and the larger your business gets, the more likely you are to need a CPA.