Just like any business, small businesses must pay taxes. However, there are some benefits afforded to small businesses in particular... Here’s what you should know! First, before that: if you are looking for a comprehensive tax preparation guide for artists, entrepreneurs, or the self-employed, do not hesitate to contact the Agro Accounting CPA experts, as we excel at rendering top-quality accounting and income tax services.
Choose your legal structure wisely
If you own an unincorporated business, you are a sole proprietor, also known as a small business owner. This is common for most people in the United States, accounting for 23 million people. Sole proprietorship taxes are convenient since you only have to report your income, profits or losses, and overhead charges on IRS Form 1040 plus Schedule C. It is strongly advised to choose your business’ tax structure as a sole proprietorship, S corporation (“corp”), C corp or LLC.
Use tax deductions to reduce your taxes
As a small business owner, you have to expand your financial resources! Your business expenses include business travel, business utilities, donations, medical insurance, depreciation, and much more. Luckily, you can claim small business tax reduction benefits to minimize your taxes owed.
Pay taxes in three-month intervals
If you owe taxes of $1,000 or more, you must pay taxes quarterly. However, unlike a salaried person (employee) whose employer withholds some amount of taxes with every paycheck, sole proprietors, freelancers, and small business owners assume the full tax “self-withholding” burden. Also, if you are paying taxes every three months, you don’t have to submit an obscene amount of taxes together at the end of the tax year.
List of business taxes you might have to pay:
- Self-employment tax
- Excise tax
- Sales tax
- Payroll tax
- Property tax
Conclusion
Having an expert accountant by your side can help you throughout your small business’ growth. They can help you avoid common pitfalls that you might overlook. Heed the points mentioned above or hire income tax services for the self-employed and small business owners from Agro Accounting CPA. We can help you with accounting services, tax deduction tactics, and more.
