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Tax tips for entrepreneurs
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There are many ways that entrepreneurs are trying to cope with the down economy. Because income at it's core is revenue minus costs, you can maximize income by increasing revenue or reducing costs. Seems like such a simple concept but it's tough times like these that causes business owners to evaluate their current operations. Sometimes there is Low hanging fruit that is missed during the prosperous times. These are obvious revenue builders that can easily be added. There may also be unnecessary costs that can be trimmed off.
I discussed Stimulus small business tax tips in a previous article. These are tax benefits afforded small businesses through the recent stimulus passed. The Financial Post featured an article discussing excellent tax tips for entrepreneurs. While the article is addressed to Canadian businesses they are all applicable to US businesses as well. The tips include:
- Reviewing your estimated payments. As a small business owner you're most likely paying some forms of estimated taxes. Review with your accountant to ensure you or your business are not making payments that are too large. If profit is down this year, and you are estimating payments based on last year's figures, you may be paying too much.
- File as early as possible if you are due a refund. The benefits of this are obvious, but if you are calculated to receive a refund, file as early as possible so you have the benefit of the cash flow, that may be used for a number of things.
- File as late as possible if you owe taxes. If you owe taxes, see if you can delay filing and payment a while. You might need the cash for a very short period of time and the cash flow may help. Plus you may discover some new facts that will lower your taxable income. I do not advocate waiting until the last day or using the allocated amounts for long term commitments, but just a little planning here may help.
- Explore potential refunds and tax credits. Is your company engaged in activities that may afford it special credits, refunds or deferrals? Ask your CPA if they know of any resources you can compare with your business activities.
Tax planning should be a year long agenda item, not just around the end of the year and your tax filing deadline.
