The thrill of going into business for yourself can help you strive to work as hard as you can to be successful. Your mind may be focused on making great products and interacting with customers, but it's vital that you pay attention to accounting and tax issues so that you don't find yourself in hot water with the IRS or end up going bankrupt within your first few years. Be mindful of these pointers.
Know Your Quarterly Tax Requirement
Unlike most people, business owners have to estimate and pay their taxes each quarter instead of once a year. This can be perplexing when you're just starting out, so it may make sense to hire an accountant who can help you determine what your tax burden is and encourage you to pay on time.
Keep Personal Money Issues Separate
To avoid dealing with a huge headache during tax season, it's important that you're especially mindful of keeping your personal financial issues away from those of your growing company. It may seem like a minor detail if you pay for your groceries with your business credit card, for instance, but actions like that building up over time can mean complete confusion when it's time to file taxes. Keeping things like that separate can help you focus on other things.
Know Whether You're Using Independent Contractors or Employees
When people start working for you, you may not be paying that much attention about their official title. However, for accounting and tax purposes, you need to know whether you've got employees there or independent contractors. The difference between the two means a difference in the way you file your taxes at the end of the year and dictates what kind of expenses you'll incur on their behalf. If you have employees, you're likely to be responsible for paying social security and unemployment insurance, for example. Independent contractors will typically require none of those things, but you are unlikely to have as much control over their work practices or time.
So how do you know what kinds of workers you've got? Typically, if they perform a variety of functions in your building or warehouse and you decide when they will show up and go home, you've got an employee. If they do a specific task for you and aren't responsible for coming in regularly, they're generally a contractor. You should talk to a accounting expert to know for sure.
Being smart about these issues when you roll out your new small business can be a key component of your company's success going forward. Work with one of the small business accounting experts in your area to be certain that you're making sound financial decisions. Contact an accountant such as Don Lamb CPA Inc P.S. for more information.Share