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Tax Tips For New Entrepreneurs

When starting a business, it’s important to have your finances in order. Part of that will likely mean dealing with some new tax considerations. To help with this, let’s take a look at some tips that can help you avoid any unwanted surprises while you’re getting a new business off the ground.

1. Be Aware of Recent Changes

In turbulent times like those we’ve all been through lately, tax conditions can change swiftly. One example with regards to taxes for business owners surfaced fairly recently in the UK, when the government slashed a controversial tax break that had been in place for entrepreneurs. Now, some saw this more as a means of curbing unfair advantages for wealthy, established business owners. But it nonetheless affected a range of entrepreneurs, and demonstrated how quickly tax considerations specific to business owners can change.

With this in mind, just make sure you aren’t trusting outdated information. Keep an eye on the news regarding tax-related bills or policy changes, and consider how they might affect you either individually or as a business owner.

2. Assess State and Federal Taxes at the Same Time

New entrepreneurs or people running solo businesses will largely get caught up in calculating self-employment tax, which is a federal issue in the U.S. – and it can be easy to forget about state tax considerations in the process. Unfortunately the U.S. doesn’t always make it easy to address both federal & state at the same time until
you’re actually setting up payment.

Our neighbors to the north set a better example, however, which can give you some sense of what to look for while you go about your tax prep. Online tax calculator tools for Alberta, Ontario, and other major provinces will calculate federal and provincial taxes automatically at the same time, making it easy for people to consider everything they’ll owe at once. Again, it’s not always as easy to find similar tools in the U.S. until you’re actually going through with payment software –– but if possible, do try to seek out similar resources. They can help you to make sure that you don’t get so focused on federal taxes (which tend to have more going on that is specific to entrepreneurs) that you neglect to include state taxes in your planning.

3. Set Aside for a Rainy Day

Setting some money aside for emergencies is always a good idea, regardless of the situation. However, for new entrepreneurs, taxes can be daunting and complicated –– which means that there’s a higher likelihood of making costly mistakes. The money you set aside can be used to pay unexpected expenses, including those that arise from tax errors (or just from owing more than you expect). This money can also help you when you’re anticipating future business needs, such as equipment or software for the coming year.

4. Hire a Tax Accountant

Bluntly speaking, taxes are hard, and they can be even harder when you’re going through the process as a business owner for the first time. It is recommended that you hire a tax accountant (at least for the first year) until you learn the ropes. While this can seem like a burdensome expense, the money saved by an accountant will often exceed what you spend for the service.

We hope that these tips will help you with your taxes as you set about managing expenses as an entrepreneur.