Tax season is especially stressful for small business owners, so you may have many questions about the process.
Starting a business can be an overwhelming task, as there are many things you need to keep track of. Tax season is especially stressful for small business owners, so you may have many questions about the process. Having a tax professional on your side can make your experience a little easier. Let’s answer some common questions about accounting for small businesses.
How should I structure my business?
Deciding how you will structure your business is a very crucial decision you will make when starting your own business. You can structure your business as a sole proprietorship, partnership, limited liability company, or corporation. The structure you choose will impact your taxes, liabilities, and how you will get paid from your business. Each business structure has its own reporting and filing requirements.
Do I need a separate business bank account?
Opening a separate bank account for your business is not necessary. But, separating your personal and business income is a good decision to stay organized. Mixing up your personal and business income can cause you to file taxes incorrectly, become disorganized, and overspend. You may accidentally use business income to make personal purchases if you combine accounts.
How do I know which expenses are tax-deductible?
Tax deductions are very important to keep track of, but they often change, which makes filing taxes a headache. This is one of the many reasons why hiring a tax professional is so helpful. Your accountant will be aware of what can and can not be written off, and they can help you maximize the potential profit of your purchases and expenses when filing your taxes.
How should I maintain my accounting records?
It is good to invest in digital accounting software or record keeping, which is a fast and ideal solution. Digital records can be accessed anywhere and can not be destroyed or damaged like physical records. You can regularly update and save your accounting records digitally, ensuring that everything is up to date. Digital records are also easy to share with your professional accountant. Allowing your accountant easy access to your records will assist them during tax season.
How can I lower my tax liability?
The IRS allows you to claim tax deductions to lower your small business owner’s tax liability. Common tax deductions include self-employment tax, home office, business loan interest, and travel expenses.
What are debits and credits?
Debiting and crediting accounts is how you increase one account and decrease the other in order to keep your books balanced. Debits increase asset and expense accounts. And, they decrease liability, equity, and revenue accounts. On the other hand, credits do the exact opposite
Contact Bowman & Company Today
Bowman & Company CPA, PC provides all of our individual and small business customers with experienced, accurate, and affordable financial services. Our financial services aim at decreasing your taxes and increasing your net worth through responsible, timely, and accurate recordkeeping. We offer our services to clients throughout the Washington, D.C. metropolitan area including Maryland and Baltimore County, Columbia, and Howard County. For more information on our offerings, contact us online or call us at (410) 381-8121. You can also find us on Twitter, Linkedin, Facebook, and Youtube.