You worked for other companies for a number of years. While this helped you to acquire a number of skills and contacts, you’ve always wanted to go it alone.
Consequently, you set up a small business. Being your own boss comes with a number of advantages, but it also means you have more responsibilities. One responsibility that you don’t want to neglect is your tax obligations. Outlined below are a few things to consider as you seek to make your business as tax-efficient as possible.
The structure of your company
Your business started off small and if this is still the case, you may still be using a sole proprietorship structure. However, as you grow, you may look into other structures such as a Corporation or Limited Liability Company (LLC). A structure like this comes with some benefits, such as separating your business finances and personal finances, and some personal liability protection for you. Your tax reporting obligations also change if you step up your business structure. It’s important to recognize exactly what tax obligations you have based on the entity structure chosen for your company.
What expenses are tax deductible?
In business, you have to spend money to make money. Internal Revenue Code Section 162 allows you to deduct ordinary and necessary business expenses. This sounds straightforward and it often is, but there are also many pitfalls that business owners must be aware of.
One of the best ways to ensure that your business is tax-efficient is to have legal guidance behind you. This way, you can be sure that you’re sticking to your obligations as well as gaining any potential tax benefits.