Running a small business can be very rewarding. As a business owner, you’ll be able to meet people, help others, and make a substantial amount of money. Nevertheless, being a business owner is not all fun and games. You’ll need to jump through numerous hoops to ensure that your business abides by all federal and state laws and regulations. One of the worst aspects of being a small business owner is making sure you keep up with your taxes. Personal taxes are bad and business taxes are far worse. Below, you will learn more about the tax situation faced by modern small businesses.
A lot of small businesses do not have employees. However, some do and this can create an extra problem. When paying your employees, you’ll also need to take steps to ensure that you withhold the appropriate amount of Social Security and Medicare taxes. These two taxes are covered by the Federal Insurance Contributions Act. They require all employees to pay a 1.45 percent Medicare tax and a 6.2 percent Social Security tax. Also, the employer is responsible for matching the amount for each of your workers.
A Medicare lawyer should be able to offer sound advice in this area. Make sure that these taxes are paid for each pay period. If you do not, you’ll find yourself paying them at the end of the year. Alternatively, you may find yourself in trouble with the IRS.
Meet The Deadlines
Another thing to remember is that there are unique tax filing deadlines for small businesses and corporations. To avoid legal problems and extra charges, it is vital to make sure your taxes are filed within the appropriate amount of time. Alternatively, it may be possible to request an extension. This will give you a little extra time to get your taxes prepared and submitted to the IRS. This deadline usually takes place in mid-April. However, it tends to vary from year to year. Make sure you’re well aware of the deadline, so you do not get into any trouble.
Remember The Work Opportunity Tax Credit
The federal government has taken measures to help the long-term unemployed return to work. They’ve done this by providing tax credits to businesses that provide jobs to those that have been unemployed for a long period of time. This is known as the Work Opportunity Tax Credit. It is primarily given to companies willing to employ military veterans, but can also be used for other long-term unemployed individuals. This specific tax credit will be available through 2019. If your hire someone that has been out of work for at least twenty-seven weeks, you should be eligible for this tax credit.
Research And Development
Researching new technologies can prove to be very beneficial for your company. Nevertheless, R&D can be very expensive. The good news is that you may be able to get a tax credit for heavy research and development. Businesses that make less than fifty million dollars in annual revenue, while investing substantially in research will be able to apply the credit to their AMT, Alternative Minimum Tax. Alternatively, the business may be able to use the expense as a way to offset their payroll taxes. Working with a tax attorney is a good way to determine whether or not you’re eligible for this tax credit.
There is no doubt that tax time is one of the most stress parts of the year for business owners. As a small business owner, it is in your best interest to think about your taxes throughout the entire year. Making the payment is a one-a-year event, but each action to take throughout the year will ultimately impact your taxes. Planning ahead throughout the year will help to simplify the process substantially when the new year rolls around. At the same time, you should not hesitate to hire a professional. While this will increase the initial cost of filing your taxes, the professional could help you save money and this could offset the overall cost.