 |
|
|
Taxes
A checklist for reducing your state and federal levies
- Choose Your Structure Carefully. What type of entity you are (S corporation, C corp., partnership) has major tax consequences. The S corporation might mean you pay only personal taxes and no corporate taxes on your income. But at higher personal tax rates, a conventional corporation might make more sense. For an analysis, see the Business Owner's Toolkit. The Internal Revenue Service also offers tax guidance for small businesses.
- Keep Lists of Tax Deadlines. Make a list of all the state and federal tax filings you have to make and when the deadlines fall. This includes sales, excise, payroll, unemployment, Social Security, and corporate income taxes, along with personal filings. Click here for a basic guide to tax obligations.
- Separate Business and Personal Accounts. Keep your business and personal checking accounts rigorously separate. The same goes for credit cards. Not only will you have a clearer picture of your company's finances but you'll also protect your privacy. If your funds are commingled and you get audited, tax authorities may delve into the rest of your personal finances, too.
- Don't Confuse Employees with Contractors. Calling an employee a "contractor" might save on payroll taxes and benefits in the short term. But if the IRS decides you erred, you may owe back taxes, interest, and penalties, and your pension plan could also be in jeopardy. See Ten Tips to Avoid the IRS Tax Trap
- Keep a Diary. Travel and entertainment expenses get close scrutiny from tax authorities. An accurate diary of your activities is an essential backup to your memory, especially in the event of an audit. Also, if you work in several states, you can save nonresident state taxes by documenting how much you worked in each jurisdiction.
To: CURRENT STORIES
To: FINANCE
|
|
|
|
|
