When you start a new business one of the biggest concerns is making sure all your dealings with the IRS are in order. As a new small business owner, there are many things you must be aware of regarding taxes.
One thing that really goes a long way to help you out when tacking care of taxes are deductibles. There may be more than you think which falls under the heading of deductible. Initial startup cost such as rent, utilities, and operational costs for a small business can be overwhelming. The good news is a lot of those cost are deductible.
According to the IRS, a business can deduct expenses deemed both ordinary and necessary. Ordinary expenses are those that may be common to your specific trade, meaning that what’s reasonable for one company may not be relevant for another. Necessary expenses on the other hand are those that are helpful, but not always obligatory in your field.
Some of the more obvious deductions for a business are things like rent, supplies, furniture and equipment. If you have employees it may be possible to deduct costs associated with providing health care for them.
You can start saving your receipts as soon as you start your business. As a startup, the IRS allows small business owners to deduct many of the expenses they incur as part of their startup even before they open their doors for business.
Many first-time business owners fail to realize that they are responsible for paying self-employment tax. Social Security and Medicare taxes are usually paid for by an employer through a withholding and since you are self-employed you become responsible.
These are just a few of the tax implication that a new business owner must make sure and comply with. If you want to make sure that you are being compliant and at the same time taking advantage of some of the new business owner tax breaks that are available, you should consult a small business tax specialist.