Saturday, May 23, 2009

Tip of the Week - Keep Taxes in Mind

It's really easy to forget or to be unaware of all the tax laws affecting your business. When one of my friends started his own business, he did not know that his bookkeeper had failed to pay the payroll taxes on time. He owed a penalty. Slip-ups like these are easy to make. When you have employees, you need to withhold payroll taxes and pay them to the IRS on a regular basis. You can't just trust your accountant or your bookkeeper to do it. You need to check up on what's going on. Be aware of the laws and their consequences. It's your business and your responsibility.

You need to have a Tax I.D. You need to pay quarterly estimated taxes on your income. It doesn't matter if you're a sole proprietor, LLC, C- or S-Corporation or partnership.

All this may seem like a pain in the neck, but it's part of being a responsible business owner. So go to www.irs.gov, to www.sba.gov and to your state's revenue services pages and find out what you need to do. Then, have a talk with your finance folks, your accountant and/or your bookkeeper.

And if you do it all yourself, keep good books with Excel or QuickBooks. And use Turbo Tax. Turbo Tax is terrific.

One final word. Stay honest, but make sure you don't pay more taxes than you need to. Learn the rules and play by them.
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