As any start-up in the United States will testify, the first year of trading is a gruelling process. Unfortunately, all through this process, you have to have one eye on your tax situation.
Hopefully, you’ve already kept on top of the likes of Accounting Today and similar publications, which can inform you about what steps you need to take in a bid to file your accounts adequately. Even though you have been one of the millions of taxpayers in the country for years, there are slightly different steps you need when you need to put together your tax strategy for your own business.
Bearing this in mind, we have enlisted the help of Barry Bulakites. He has experience in a whole host of tax programs and through today, we will take a look at some of his best tips for those small businesses who are looking to take a DIY approach with their tax in their opening years of operation.
Keep on top of your receipts
It might be a lot of hassle, and there might be a lot of paper, but we really can’t emphasize enough the importance of keeping on top of your receipts. Making sure that you keep each and every one of them means that you can always base your accounting off something – whilst also retaining crucial proof if any investigation occurs in the future.
If you go down the advised route and hire an accountant, their job is also made significantly easier.
Of course, this isn’t just about making life from a tax perspective simpler for you. It is also related to basic business principles; you will have a better idea of what is going out of your account and you can optimize appropriately.
Invoices are for more than just payment chasing
A lot of businesses approach invoicing in completely the wrong way. They believe that they simply exist to act as gentle reminders to those companies and individuals that owe them money.
Well, let’s dispel this. They are a crucial part of your tax process, and can help you significantly when the time comes to file your accounts. They are a clear record of the terms you have agreed, and just when payments are due, or have been paid.
Even though time might be precious, try and stay on top of them – it will make your accounting journey much easier.
Apply taxes as soon as you can
If you have ever bought something from a shop, you have probably noticed that the receipt contains a few different figures on it. One will be the total price you have paid; while this will also be broken down into how much this was tax.
This is just one example of best practice in relation to accounting. It means that the business in question is immediately deducting tax from their sales, and this means that the chances of any big surprises occurring at the end of the year significantly drop. The last thing you want is to be liable for a huge tax payment, and by taxing “as you can go” you can minimise this risk.