Starting a business is a risk, perhaps the greatest risk you will ever take. Many entrepreneurs put years of savings on the line, betting that their new endeavor will be a success. Others use borrowed funds to finance their start-up.
Whatever your financial situation, there is one concern that you share with every other person starting a business – ensuring that you save as much money as possible, in every single aspect of the business.
In business, as in personal life, taxes can be a tremendous burden. They are the common denominator, the topic that everyone agrees on, and about which everyone shares a single goal – how to save money on taxes.
The good news is that there are a few ways for business owners to do just that.
If you operate your business from a home office, you can take a deduction for the space used for business purposes, as well as furniture and business supplies, your internet fees and a dedicated telephone line.
Does your business require you to travel? Keep records of your mileage, airline and hotel charges – these might all be allowable deductions as well.
As a business owner, you are responsible for your own retirement plan and health insurance coverage, both of which can be deducted on your taxes.
These are just a few general tips for saving money on taxes. But there is one step you can take that will help you with taxes regardless of where your business is located or what type of business activity you engage in.
In a word: Incorporate your Business! Incorporation offers a number of benefits, including some that will help to ease your tax burden. This is where CorpNet.com can help. Download our free Incorporation Guide to learn about the differences among the various business structures, including how each will impact your company’s taxes.
If you want to form a corporation, you can choose between a C Corporation and an S Corporation. A C Corp is a traditional corporation that is owned by shareholders, files a separate tax return and pays taxes on all profits.
An S Corp, on the other hand, offers a tax benefit not available to a C Corp. In fact, the “S” refers to a sub-chapter of the IRS Tax Code, which allows the corporation to be taxed as a “pass-through entity.” Under this provision, profits and losses may pass through to the shareholders, who report them on their personal income tax returns. This avoids double taxation of the corporation’s profits.
If you would prefer a less formal structure, a Limited Liability Company (LLC) offers its own tax advantages. Similar to an S Corp, an LLC allows pass-through taxation, but does not require the formality of shareholders and a board of directors.
The S Corp and LLC are the structures chosen by most small business owners, in large part because of the tax advantages they offer.
If you need some help making a decision, CorpNet.com’s experienced, professional staff is available to answer your questions and offer guidance. Once you’ve chosen the business structure that is right for your needs, let us handle the details of the filing. You’ll save time and money with our affordable service. Best of all, our services are fully guaranteed, giving you peace of mind that you’ve made the right choice.