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Clarifying Taxes for Your New Business: Small Business Tax Advice

Congratulations! You launched your own company. Now, the work begins getting your books setup, taking on clients, and getting ready for tax season. Sounds exciting, not to worry though; LP Tax Services LLC is committed to helping you through the maze of bookkeeping and filing taxes. We’ve enabled small businesses like yours to flourish.

This blog provides a crash course in small business tax advice, arming you with the fundamentals of tax filing and decision making.

Understanding Your Business Structure and Tax Implications

Understanding your company structure and tax treatment is very important. The most common choices are:

Sole Proprietorship: This is the simplest form of company structure. In this structure, the owner and company are regarded as one entity. All business income flows to the owner’s tax return, and is subject to income and self-employment tax.

Partnership: The partnership structure has more than one owner and distributes Income among the partners. Its income is shown on their tax returns, and is subject to income and self-employment tax.

Limited Liability Company (LLC): LLC's have an advantage due to their adaptability. As a LLC you can elect to be taxed as a single member, partnership, or corporation.

C Corporation: This Company structure is separate from its owners. A corporation pays taxes. And, its profit may be distributed to stockholders as dividends.

To understand your business structure and tax implications, speak with a tax specialist to assist you in selecting the structure that’s appropriate for your objectives and company size.

Keeping Accurate Records: The Foundation of Successful Tax Filing

All businesses should have strong record-keeping to manage the business and for tax filings. Here are some activity that should be considered.

Income: Track your company income—sales, fees, and other sources.

Expenses: Record all your company's expenses—from supplies to equipment purchases and marketing.

Mileage: If you use your car for business, faithfully record your mileage using a mileage journal.

Receipts and Invoices: Save all your business income and expense receipts. It’s also good to have invoices to support your sales.

Keeping your documents organized will help ease managing your business and filing your income tax returns services. Consider working with a bookkeeper, accountant, or utilize accounting software to streamline recordkeeping process.

Common Deductions and Credits for Small Businesses

Deductions help lower your taxable income. Small firms can typically deduct these items:

Business Expenses: The majority of your company's operating costs are deductible. This covers utilities, rent, office supplies, tools, travel, and advertising expenses.

Home Office Deduction: If you have a dedicated area in your home, you can apply some of those expenses to your business if you meet certain criteria.

Startup Costs: Some expenses incurred in forming your business—such as fees for website development and company formation—may be deductible.

Depreciation: You can deduct over time the wear and tear of company assets.

Apart from deductions, small companies can benefit from tax credits, including research and development and job creation to lower their tax liability. Speak with a tax professional to find out what tax credits are available to you.

Seeking Help from a Tax Professional

Working with a qualified tax accountant that is knowledgeable in small business tax advice has many advantages:

Expertise: A qualified tax accountant can lighten your tax burden by ensuring you're using all tax credits and deductions available to you.

Accuracy: They can manage the complexity of tax filing, and ensure tax compliance.

Tax Planning: Working with a qualified tax accountant year-round can create a tax plan that benefits your small business.

At LP Tax Services LLC, we take pride in empowering businesses like yours to succeed. Our tax professionals specialize in income tax return services and are dedicated to delivering personalized support tailored to your needs.

Following these guidelines and consulting a specialist can ensure your small business success. A proactive tax strategy can greatly enhance your company's long-term profitability and expansion.