Own a business? What do you need to know about business taxes….

Corporate or business income tax is applicable in nearly every state. The legal structure of your business determines what type of income tax return you need to file. Typically, there are five types of business:

• Sole Proprietorships
• Partnerships
• Corporations
• S Corporations
• Limited Liability Company (LLC)

Federal as well as state government levy business income taxes that vary according to the type of business. The structure of filing returns also differs according to the type of business. Sole proprietors need to file their personal and business income taxes on a single form, while and LLC is taxed separately from the owners,

Maintaining up-to-date and accurate records is the best way to steer clear of tax related problems, say tax lawyers. It is imperative to have an excellent understanding of your company’s financial state of affairs.

Guidelines to help reduce your business income tax:

Always check your payroll

This is one of the main areas where you are most likely to get into trouble with the authorities, even if the only employee happens to be you. If you are the only employee you will have to make the expected payments quarterly. It is very difficult for a new business owner to precisely predict the income beforehand and tax attorneys know this. However, this is the law and you are still accountable for the estimated quarterly payments.

In the movie The Untouchables Al Capone ran a criminal organization in Chicago in the 1920s. He was smart and wise and always two steps ahead of the police. He was finally captured and convicted on tax evasion. If he had a tax lawyer he did not take their advice. His criminal organization was highly profitable but he did not pay the right amount of taxes and this is what ended his gangster days.

Just because you are not a rich gangster who everyone knows was responsible for many deaths do not think the IRS cannot get you. The IRS is very powerful and why they need to be watched since they have a tendency to employ criminals themselves like Lois Lerner. That is another topic though. You need to follow the law and pay your taxes. If they can get Capone, they can get you. Not paying nearly enough taxes is not going to work.

This marvelous digital tool (Tax.USAttorneys) did not exist in the 1920s. Almost 100 years later, finding tax legal help is much easier. If you have an issue with the IRS, you need tax legal assistance.   
Calculate the estimated income, Medicare, and social security taxes

If Medicare and social security tax is not calculated appropriately you would have to deal with a tax penalty and interest. If you are willing to spend the required time and energy, then reading on the subject can help. It is advisable to take advantage of tax advice from any established professional.

Obtain remarkable tax help, particularly if you have employees

Taxes become more complex when employees are involved. This is because you are required to hold back taxes, on behalf of each employee and report this either on a quarterly or monthly basis. This is where a tax professional should enter the picture. If there are several employees working under you, this tax professional or a payroll tax service can help by filing on your behalf. Errors are inevitable in employment tax reporting.

Keep track of your traveling costs

If you own a vehicle, which is used for both, business as well as pleasure, it is advisable to buy a pencil or a pen and a notebook to keep a track of the times when you used the car for business purposes. Record all business calls, business trips to either deliver or pick up material, client entertainment calls, or any other use of the car for business purposes.

This will equip you to accurately deduct all the operating costs involved for the business use of the car. In case you are audited, this will help to keep trouble at bay. Tax lawyers point out that the IRS is aware of the fact that hardly anyone keeps records. It is one of the best tax tips for small business entrepreneurs. It can result in a profit of thousands of dollars per year depending on how much you use this car for business reasons.

Planning your retirement

It is advisable to take advantage of the tax savings plan suggested within a retirement plan. Retirement plans like an IRA or a Simplified Employee plan can help give you an incredible opportunity for tax saving. The advantages are dual in nature. It is possible for you to get an instant tax deduction after which the money will accumulate and the tax will be postponed until it is withdrawn by you.  

If you have any issues with the IRS such as back taxes, audits, or liens, it would be judicious to seek help from a tax lawyer. Your legal pro will be able to make sure you don’t get into sort of trouble with the IRS right from the start and if you do they will let you know on how best to handle that particular situation.

Contact us if you have any questions. We may get back to you that same day.