Small Business Tax Help Taxing Affairs:

A self-employed individual or an entrepreneur has to confront several challenges in his work tenure. Apart from devising plans to expand his business, there are various other business aspects that he has to sort out. One of the significant issues that every businessman has to deal with is tax. Especially, the smaller businessmen have to be very shrewd in the matters of taxation.

Tax Fundamentals :

There are certain fundamentals that every small businessman must consider. They are as follows:

1) Every self-employed person or small entrepreneur must file income tax returns if his net annual earnings are $400 or more.

2) The entrepreneur would also have to file his income tax returns even if his annual income is less than $400 but satisfies any other conditions as mentioned in the income tax form 1040.

3) The self-employment tax is collected as social security benefit for the self-employed or small entrepreneurs. The self-employed individuals also need to pay Medicare tax along with the conventional income tax. The self-employed individuals need to pay taxes as a security cover for retirement, disability, medical insurance as well as survivor benefits.

4) Those who have a church employee income of $108.28 or more also need to pay self-employment taxes.

5) The business entrepreneurs have to pay a self-employment tax of 12.4% on the initial amount of $90,000, which is a combination of wages, tips and net earnings. The 12.4% self-employment tax is a combination of self-employment tax, social security tax and railroad retirement tax.

6) The small entrepreneurs need to file self-employment schedule with the form 1040 for the year in which the businessman closed down his business.

Tax Payment Help :

Often, small businessmen are a bit reluctant while paying taxes. They wait until the last minute for paying the taxes. These are not very good signs and businessmen must make it a point to pay all the taxes in time. The following ways would help the entrepreneurs in paying their taxes regularly:

1) Every year, an entrepreneur must earmark a month or a day for paying the taxes. He must highlight that day on his calendar so that he is reminded of it everyday.

2) Another easy method that can help the businessmen to pay their taxes regularly is the use of tax software. This would help them in accurate tax calculation within no time. For an entrepreneur, tax calculations are often very tedious and an arduous task. This is where the importance of tax software is realized. Some of the software programs also provide the tax forms so that businessmen only need to enter the details and submit it online.

3) Businessmen can also take the help of professional bookkeepers so that their job of filing the tax returns becomes easier. With a bookkeeper at hand, the job of business organization and filing returns becomes very easy.

4) All self-employed individuals must take a crash course on taxation. This is because once they understand the basic terminology of taxation, they can easily calculate and deal with their tax matters. Often, people think that tax matters are very complicated. However, once they understand the basic concepts of taxation they can do the entire filing job on their own. Usually, the crash courses on taxation cover aspects like proper book-keeping of income and expenditure of the entrepreneur, employment taxes, online filing and several other major aspects.

5) For those businessmen who cannot complete tax matters on their own can hire an accountant for taking care of the tax affairs of the business. The requirement of an accountant is increasingly felt when the magnitude of business is growing each day. An accountant can professionally handle the cash flows and also keep a track of the financial condition of the business. He can hence handle the tax matters very well.

6) As the business grows into a large organization, even an accountant is not enough to deal with the tax matters and the businessmen feel the need of a Chief Financial Officer who can understand the further complexities of business taxation.

Small Business Tax Tips :

All businessmen try to save as much money as possible while deferring the payment of taxes. There are certain basic tips that are important for the small businessmen in the process of paying the taxes. Some of the major tips are as follows:

1) There is a special plan for the self-employed people to reduce the burden of taxes and save their hard earned money. There is a plan called Outstanding Retirement Plan for the self-employed Solo 401(k). This plan helps the entrepreneur extensively in deferring the taxes. With this plan, the businessmen can defer taxes upto a maximum of $44,000 annually. A large number of small businessmen and even bigger business corporations take the help of this plan.

2) While selling the business also, the entrepreneur is required to take certain major steps while selling the assets. The businessman is advised to divide all their assets into two categories, namely, tangible and intangible assets. If the entrepreneur is operating in the service industry then his assets are mainly intangible and have no basis in his assets and the entire gain is taxed as capital gain. When he is selling the tangible assets, the gain is taxed as capital gain rates.

3) The entrepreneurs must have such a business structure with a view of saving taxes as much as possible. They can establish their business in special economic zones declared by the government and enjoy tax holidays for a fixed period of time. Also, while taking over another business entity the tax loop must be kept in mind.

4) If individuals are embarking on a new business they must decide as to which legal form the business would take. This in turn would determine the amount of taxes the individual would need to pay. Not only that but it would also determine as to who can invest in the business and how can the entrepreneur secure the financial position of his company.

These are some of the basic tax features that every small businessman must be familiar with. This in turn would help him in paying lesser taxes fairly regularly.