You’ve read the stories about corporations such as Time Warner, Qualcomm, and Prudential Financial not paying a dime in taxes. These companies have armies of accountants and tax lawyers to figure out the fine details of the tax code. You, dear new business owner, don’t. You’re going to have to ensure you pay your taxes owed—but not more than you need to. Here are suggestions based on practical advice from the experts:
- Save every receipt of anything you purchase for your business. You can probably guess at some of these deductions—like office furniture or internet and telephone service. But you might not know your business credit card’s convenience fees and discounts to customers also could qualify as tax deductions.
- Put your receipts in one central location. This excludes your car’s console. An expandable file folder will work in the beginning.
- Set up a simple accounting system on QuickBooks or other simplified bookkeeping system. Start using it immediately. QuickBooks has a learning curve, so don’t try to learn it on, say, April 1.
- If you need to learn something, take the class. Education and training for employees is tax deductible. Again, save all your receipts.
- Gifts for customers are tax deductions up to a point ($25 deduction limit for each).
- Advice you pay for related to your business or startup is tax deductible or amortizable—this includes investment advice and fees, legal fees, licensing fees, and royalties.
- Get competent financial and tax advice sooner rather than later, especially as you decide the type of structure you will use for your startup. It might be a sole proprietorship, partnership, LLC, S Corporation, or C Corporation. And if you don’t know the difference between these options, now you know why you need to seek advice right away.
Remember, don’t substitute this blog for real tax advice, which, after all, is tax deductible.