April 2005

10 Quick Tips for Small Business Owners

These tips are intended to provide possible tax strategies that may or may not be available to you depending on your specific tax situation.  Always consult your TaxRoute tax professional before implementing these or other tax strategies.

Develop A Business Plan. This will help your accountant or tax advisor to determine what activities, such as travel and other expenses might qualify as legitimate business expenses.

Consult With A Tax Advisor.  You will need to review your business plan or business ideas with an accountant and tax advisor to review financial  considerations, including the impact of your business on your personal taxes, any sales taxes you may need to collect, payroll issues.

Incorporate Your Business.  Whether you choose an LLC, S-Corporation, or another structure, incorporating your business will be a an important part of your overall tax strategy. 

Document All Business Expenses. Be sure to record these items, including all the start-up costs for your business, monthly hosting for your website, phone, office expense, etc.

Document All Personal Expenses. Keep a log of your personal expenses as well; this can help the tax professional clearly identify, compare & contrast the personal versus business expenses.

Document Miles Driven In Your Vehicles

Keep a log of the trips (short drives) taken while working (NOTE: mileage spent going from home to work is usually not included when you file your taxes.)

Consider Using Accounting Software For Your Small Business.

This will help you to keep consistent and accurate records of your and expenses, plus it may allow you to view various help capture the information in a way that is most useful to you. 

Organize and Save Receipts

If you are ever audited having the receipts can come in handy if/when the IRS wants to to see 'proof' of these expenditures.  Develop a neat and orderly filing system early on, to minimize confusion and headaches later.

Save enough money to pay your taxes.  

So many new (& old) business owners do not  take this seriously enough.

It is imperative that you as a business owner be disciplined about how much of each payment received belongs to the business and how much is due to Uncle Sam.

Consider using independent contractors to complete tasks versus hiring  hourly or salaried staff.  Depending on your business, this may be an option if you structure the workload and workflow in an appropriate fashion.  This is not a feasible option for every business owner, so it is necessary that you review your particular situation with your TaxRoute tax professional.