Going into entrepreneurship and starting your own business is sometimes not easy. This is because you are your own boss and you have a lot to worry about.
As you’re worrying about making money, you have to worry about being tax compliant too. This is because paying taxes is a legal responsibility of every business.
As a business owner, you just have to make sure that your business is up to date with tax-related obligations. Failure to stay on top of your tax-related obligations can lead to expensive fines and other sanctions.
Is Your Business Tax Compliant?
Table of Contents
Even a bit of unintentional sloppiness with regard to taxes can undo the effects of years of hard work. Although taxes can be complicated, experience has shown that businesses tend to slip up most often in one or more of a few particular areas.
Being aware of these pitfalls and how best to avoid them will help you a lot. It will go a long way toward keeping any company compliant with all the relevant tax laws and regulations.
Skilled, dedicated accountants are always ready to help business owners stay on top of their taxes in any relevant way. As those who have a look at all the tax services offered by a representative firm will see, that covers quite a bit of ground.
This owes to the fact that the average business is subject to a mind-bogglingly complex composite tax system, with the federal code alone including more than ten million words.
No business owner can ever be expected to become familiar with all the included rules, of course, but that turns out not to be necessary, in general.
In fact, entrepreneurs and business leaders who simply focus on a few especially important issues can generally put most worries about tax compliance to rest. The five pieces of advice that help the most in general are:
#1]. Stay on top of sales taxes
Not every state has sales taxes, but those that do tend to depend upon them heavily. Contrary to what the name might suggest, sales taxes often apply to certain types of services, in addition to being levied when physical products are purchased.
Sales taxes regularly trip businesses up, in fact, because they tend to be more complicated than they initially appear. In some cases, it will even be necessary to have a professional look into whether a business’s offerings are subject to a state’s sales taxes and at what level.
Beyond that, businesses need to carefully track the nature of their sales in order to be sure of charging appropriate rates for each transaction.
#2]. Create a calendar
Most individual taxpayers can get by with keeping April 15 in mind, but business owners need to be aware of more dates. Developing a simple calendar that includes all the relevant tax-related deadlines will make late filings or payments less likely.
#3]. Preserve your records
Just as with personal taxes, businesses need to be able to back up the claims made on their tax returns. In short, you will have to always preserve your business finance-related records.
Preserving all the records concerning a business’s financial activities should be considered de rigeur in every case. Using the right billing and accounting tools can help you track bills and invoices as well as preserving your records.
#4]. Keep up with the whereabouts of your employees
State income taxes regularly prove problematic for companies with workers who move around. In some cases, it might be necessary to withhold income tax for an employee who spends even a few days working in another state.
Businesses that run into trouble with such issues tend to do so because of not keeping any records of their employees’ work-related travels.
#5]. Understand labor laws
Any business with employees needs to stay in compliance with all the relevant labor laws. As a number of these inevitably impact taxes, failing to stay on top of them can lead to double jeopardy.
Even given how complicated the tax system is, keeping up with relatively simple matters like those above will make problems a lot less likely.
While paying taxes is rarely pleasant, failing to comply with the laws that apply to a business will typically be even less so, in the end. As such, business owners will always do well to keep these five tips in mind.