There are a few ways to avoid having to pay taxes when that time rolls around again. First off, you should have a good business structure in place if you haven’t already done so. If your business does not have a structure in place, it will be automatically labeled as a sole proprietorship and you will need to list all of your business income and expenses on the Schedule C section of your tax return. This means that you will be much more likely to get audited. Businesses that are incorporated, on the other hand, will enjoy a lower tax liability and will be less likely to get audited. Some businesses are simply more tax friendly than others, and sometimes the cost of setting up an entity, as well as maintaining an entity, outweighs the tax benefit, so that is something to consider as well. It is important to research all of the options available to you to find the one that will work best for your particular business. You need to consider such things as how many employees you have, how many owners are involved with the business, what type of work you do, and how much revenue your business projects.
Hiring a tax attorney is a great way to make sure that your taxes will work for you rather than against you. An attorney will be able to create any necessary legal documents that you need to support the business structure, as well as to protect your assets. Your attorney will also be able to give you valuable advice on the different liability issues of every type of structure.
You should hire an accountant if you don’t already have one. An accountant will help you decide what the best entity will be for your company in order to minimize your taxes. You may want to start out as a single member and then take on a new partner in a couple of years as your company expands. If you plan on growing your business rapidly, and then sell your company, it may be better to incorporate and file as a C corporation. This tax code will restrict the types of owners for certain entities. An accountant will help you to understand everything you need to know about this topic so that you can choose the best and most effective structure for your business. Your accountant will also be able to help you identify any allowable deductions that you may qualify for. Far too many companies often miss out on money because they simply do not know all of the ins and outs of tax preparation.
You always want to keep records and learn about deductions because it will help you to reduce your taxes, as well as help you to avoid audits. Make sure that your record is accurate and learn as much as you can. You will be able to reduce your tax liability effectively. You also need to make sure that you file your taxes on time and that they are accurate so that you can avoid any late penalties and interest. Your accountant will help you find any allowable deductions and will make sure that all your expenses are going to be reasonable for the type of business that you are in. If for some reason you can’t file your return on time, you will need to file for an extension and you will have to pay an estimate of what the tax due will be before the deadline. If you cannot pay your taxes on time, there are many programs available through the IRS that will be of great help. If you are not able to pay, you still need to file by the due date because the penalties are much worse if you do not file than if you are late. Unless you are an accountant or an attorney, it is best to hire an attorney to help you to make the most of your tax return. They are a very valuable asset to have on your side, and it can save you thousands of dollars. You can ask them anything, and they will be able to give you sound advice that you can trust and rely on for your business decisions.