What You Need to Know About Corporate Tax Law in Your First Year of Business
- When Using an Attorney for Probate Saves You Time And Money - July 2, 2020
- 3 Different Approaches for Getting Out of Debt - July 2, 2020
- 5 Ways to Limber up Your Retail Employees Before Each and Every Shift - July 1, 2020
When you decide that it’s time to start your own business, it can be an exciting experience. However, as time goes on, you’ll shortly find out that there are a lot of responsibilities that you must undertake as a business owner. When it comes to corporate tax law, here are some basic things you need to understand to get started successfully on your way.
Know What Business Category You’re Going to File Under
When you first start your business, there are three main business categories that you can choose. Each has its own pros and cons regarding taxes and business operations. These include a sole proprietorship, partnership/corporation, and an S-corporation. Before you can file your business taxes successfully, you need to understand what business category you’ll want to be in.
Set Aside Money Throughout the Year
While the business category that you choose to file your taxes under will highly affect how much you pay in taxes and your deductibles, you’ll need to plan ahead. As a general rule of thumb, it’s a great idea to set aside about one-third of your total business earnings for taxes. This way, you know that you’ll be covered when tax season rolls around. If you’re looking for a more direct percentage to set aside, you can get help from a firm familiar with tax law, Carter and West Law or another local firm, who can give you a number based on your specific business category.
You Must Keep Receipts
It’s vital that you keep records of your business expenses so that you can deduct as many as possible when you go to file your taxes. These documents will be compiled of receipts that you got from the various transactions that you did throughout the year. While this may seem like a major hindrance, to begin with, it’s really not. With the help of technology, you can easily keep track of many of your business receipts in seconds without having to physically store them.
You’ll Need to Choose a Depreciation Method
As a business, you’ll be able to depreciate expenses that you incur during your first year on things like equipment. You’ll need to decide what depreciation model you’ll want to use. You can choose to depreciate a large sum of these expenses in your first year of operation to offset income earned or you can choose to depreciate these expenses slowly over several years.
Being a business owner comes along with lots of responsibilities. Understanding the basics of tax law is a must to ensure that your operations run smoothly. The above are four main basics of corporate tax law that you should fully understand.
Anica Oaks is a professional content and copywriter who graduated from the University of San Francisco. She loves dogs, the ocean, and anything outdoor-related. You can connect with Anica on Twitter @AnicaOaks.
All content on this site is the property of Taxbot, LLC, The Profit Junkie Podcast, or the author. You may link to any article that you wish, or share via the social media buttons below. However, please do not copy articles or images for use on other sites without express written permission.