If you want to be a successful business owner, you have to know some things about tax laws to succeed. Even if you hire an accountant, you have to know some things for yourself. Today, I will share some tips about various tax laws which every new small business owner should know about. These insights are derived from my experience working with clients through my own accounting firm.
As a new business owner, you are already struggling to keep your costs low while increasing the amount of money that you profit. Tax breaks are a great way for you to reduce your costs so you profit more money. If you look at Section 179 of the IRS Tax Code, you will find that you can claim deductions on your business equipment. However, each year the deduction could change so you have to go to the IRS website frequently to make sure you are up to date with the most current information.
There are numerous tax breaks available for businesses, which is why you have to take time to see which ones your business qualifies for or which ones it could qualify for that would allow you to benefit the most during tax time. For example, there is the Work Opportunity Tax Credit. This allows you to receive a credit for hiring an individual who has had a hard time landing employment.
If you operate any part of your business online, as many small business owners are doing, you need to know e-commerce laws. It is understandable that you want to cut back on your costs as much as possible, but this also makes your business a part of the “tax – free” zone, under federal laws. Currently, there are no laws in place that requires you to collect taxes. The good news is you can attract more customers by not charging them taxes, however, depending on the state where your customer resides they may be hit with a “use” tax.
Paying Estimated Taxes
You must pay estimated taxes, since you are considered self-employed and do not have taxes withheld from your income before you receive it. The IRS requires these taxes and self-employment taxes to be paid quarterly and if you live in a state that has taxes, you will be expected to pay them quarterly as well.
By knowing tax laws you will be able to control the future of your business better. The choices you make can be smarter when you are knowledgeable about the tax law.