Running a business is a tough enough job without getting confused about your taxes as well. Making mistakes with your taxes can get you into a serious mess with your finances, and even into legal trouble. Avoid this happening by getting your taxes right from the beginning. 

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Hire The Right Accountant

Your accountant ought to do more than prepare your financial statements and do your taxes. If this is all that they offer, then you need a different accountant for your small business. 

Instead, your accountant should be working with you throughout the year to track your income and expenditures, to monitor your cash flow, net profits, and growth. You should find an accountant to work with from day one of your business, not just in tax season. 

Claim All Income That Is Reported To The IRS

The IRS gets a copy of the 1099-MISC forms that you receive, so they can check the income that you report against what they know you have received. You need to make sure that the income that you report to the IRS matches the amount of income that is reported in the 1099s. If you don’t, this a serious red flag to the IRS. 

If you have got in a mess with your reporting, tax negotiators can help you to sort out the problem. 

Keep Records

You can make sure your tax return is correct by keeping thorough and accurate records all year round. If you don’t keep good records, you could miss out on some deductions, or put yourself at risk of an audit. All businesses, no matter how small, should invest in some basic accounting software to help you to keep track of your income and expenses. 

Separate Business From Personal Expenses

If the IRS does audit your business and finds that you have personal expenses mixed in with your business expenses, whether or not you reported your business expenses accurately, they could start looking at your personal accounts too. Always keep a separate bank account and credit card for your business, and use them only for business expenses.

Understand The Difference Between Net And Gross Income

If your product costs more to make than you charge for it, then you will lose money no matter how you sell. Owners of small businesses often forget to take into account the difference between net and gross income. 

For example, if it costs you $50 to make your product, and you then sell it for $100, then your gross income is $50. However, after you deduct your expenses, the net income could drop to $10. You need to know what your gross and net profits are to grow your business. 

Correctly Classify Your Business

If you don’t correctly classify your business, you could end up overpaying taxes. Your taxes will be different, depending on if you are classed as a C Corporation, S Corporation, Limited Liability Partnership, Limited Liability Company, Single Member LLC, or Sole Proprietor. Speak to an attorney and an accountant to make sure you get it right.