It is tax time! And that means an appointment with your CPA should be in your future. When you go in, here are some questions you should make sure to ask:
Should my tax entity status be changed? After preparing your taxes for 2011, your accountant should be able to help you determine whether the entity status for your business is the best or if you should change it. Remember, you have 75 days from the 1st of the year to submit a Form 2553 if you want to change your status to an s-corporation from some other entity.
Am I paying all the employment taxes I should be? Double check with your accountant that you are paying all necessary employment taxes so you don’t get a surprise later on. For instance, are you employed in Denver, Aurora or Greenwood Village? If so, are you paying the opportunity privilege tax? If you are an s-corporation, are you paying unemployment insurance? Are there any other taxes you aren’t aware of?
Would setting up a retirement plan help me? For some people, a retirement plan may save money on taxes and help prepare for retirement. However, for others it may not create that much of a tax break and spending the money elsewhere may be more beneficial. Ask your accountant what is best for you.
What other areas can I change to save more on taxes? There may be areas that you can save money and not even know it. For instance, this year there was a tax credit on some home improvements. If you needed them, it was a great time to do them. There may be tax breaks for hiring certain people, setting up a business home in certain areas or other things. Ask you accountant about your goals for next year and see if any of them can incorporate tax breaks.
Would refinancing help me? Whether it is your home, your business building, or a loan on equipment, you may want to see if refinancing would help you out. Ask your accountant about the current rates to see how much you would save.
Every year, I make goals. Get in shape, eat better, spend more time with my family, read more. However, I also try to make goals for my business. Here are five things to think about to help your business financially this year!
Keep mileage logs. This is one of the hardest things to do but will help if you are ever audited. The mileage rate for 2011 was 51 cents. Therefore, if you drove 300 miles a month, you could deduct $153.00 from your profit. That may not seem like much, but it adds up. And if you are like me, you probably drive a lot more than that each month. Check out next week’s multimedia blog for examples of good mileage logs.
Plan for retirement. Depending on the type of retirement account you set up, you can end up saving money now and be able to retire in the future. Speak with an investment advisor to see what is best for you. If you don’t have one, contact me and I can give you a few names to contact!
Ask about new tax relief. For the past several years, different bills have been passed at both the state and federal level giving tax breaks for different things. Talk to your accountant throughout the year to see if any tax breaks get passed or sign up for Google alerts on the topic.
Make sure you have a CPA! This is something that many small business owners overlook. Having a CPA make appear to be an expense you cannot afford, but a CPA will help you find areas to save on, make sure your taxes are prepared right, and give you advice throughout the year. If you don’t have one, contact me and I can give you a few names to contact!
Get accounting software. If you only have a few expenses each month, this many not be necessary. However, if you have a lot of expenses and income from multiple streams, accounting software (such as Quickbooks) helps you track where your money comes from, and where it goes!
This week, we look at the basics of LLCs and corporations. Please enjoy this YouTube video and if you have any suggestions for future videos, please comment on this post!
When you first meet with a business attorney to set up your business, it is best to come prepared. Below is a list of information I ask my clients to think about before coming in to see me for the first time:
Determine who is going to own the business. If you are unsure if you are going to own the business by yourself or with others, bring this up at your meeting as your business attorney can let you know some things to think about. Partnerships do work, but they take a lot of work.
Think about some names for the business. It is best to have 2-3 names ready when you come see your business lawyer. In many cases, the first name will work, especially if it is unique, but if there is someone already using the name for their business having more than one name ready ensures that you can get the ball rolling.
Note any expenses already incurred in setting up the business. Your small business attorney will need to know what type of expenses you have had and what type of expenses you foresee. Your small business attorney and your small business accountant will probably work together to determine what expenses are deductible and if one tax entity would make sense over another based on the expenses you have had and you foresee.
If you are interviewing business attorneys, have questions ready to ask about their experiences. For instance, I usually like to tell potential clients about other types of businesses I have set up, accountants that I have worked with, and information about my background if asked.
Have a list of your advisors on hand. If you have advisors, you should bring it with you. Even if you don’t have all the advisors you need, bring the ones that you have so that your business lawyer can help you fill in the gaps.
Attorney: Your attorney will help you stay out of legal trouble from helping you choose the right business entity to writing the sales document when you sell your company for millions!
Banker: Your banker will help make sure you have the right accounts set up, walk you through loan processes, and offer general business advice if they are good.
CPA: You accountant will know more about you than your spouse; he or she should know where you spend your money, how to spend it so you save on taxes, and file the right documents so your city, state and the IRS don’t come after you for unpaid taxes.
Insurance Agent: Your insurance agent will make sure you have the right coverage without having too much coverage and being insurance poor; set up yearly reviews so that if your business changes, your coverage changes with it.
Mentor/Business Advisor: You mentor should be someone that is in a similar field or at least has owned his or her own business; he or she will give you advice when you hit bumps, a shoulder to cry on when you have lows, and celebrate the successes of your business throughout your company’s life!
This week, we look at the basics of sole proprietorships and partnerships. Please enjoy this YouTube video and if you have any suggestions for future videos, please comment on this post!
