After two very odd and challenging years for small businesses, the hope for 2022 was that we would start to see some return to normalcy. With runaway inflation and supply chain constrictions, “normal”…even “the new normal”…seems very far away still. Whether things go back to the way you knew them or continue to change, you’ll need to plan ahead for your business. That brought up a few questions that would be good to ask of your accounting professionals.
Are my estimated tax payments correct?
Estimated taxes will change dramatically from year-to-year. No matter what your business structure, it’s best to get a good handle on what your estimated tax liability is going to be, and make sure to send that money in to the IRS on a quarterly basis. Don’t be afraid to send a little more than you think…you’ll get it back when you file a return. But try not to aim too low…because if you don’t pay “enough” of your estimated taxes, you’ll likely incur extra penalties with your return.
Could I benefit from a different business structure?
Maybe you started out your business as a sole proprietor. It make sense, really, because it’s simple and very inexpensive to set up. Maybe now you feel like you could use the extra legal protection an LLC would afford…or you want to know more about the tax advantages of an S Corp…or you’ve decided to take on a partner and sole proprietorship just won’t work anymore. There are no hard and fast rules for what type of structure most businesses should have. Sometimes the structure you start with just doesn’t make sense 2 or 3 years down the road.
What new tax laws are likely to impact my business?
Earlier this year, we talked about the tax implications of the federal government changing the way online payments are reported. The days of Venmo and PayPal being in the shadows are necessarily changing! But that’s really just the tip of the Iceberg…every year there are dozens, if not hundreds, of new tax laws passed. You’re running a business…you don’t have time to stay on top of what all the new laws are, much less determine how they will affect your particular business. That’s why you hire an accounting service to begin with!
Are there better ways I could handle cash flow?
A good circulation of cash is lifeblood for a small business. You have to pay vendors and employees, keep the lights and internet on, and reinvest in the business, among other things. But if you’re just throwing money at all these as they come, you may end up running short in critical moments. Your accounting service should be able to look at what you’re spending and have some good recommendations to help plan ahead…that way if you have a slowdown and cash shortage, it won’t prove fatal to your business.
What is the tax impact of working from home?
Whether you’re talking about you working from home or your employees, there are tax implications for your business. There are home office deductions to consider, as well as payroll tax variations if a person lives out of state. Less commute time and consuming less gas can be good for you or your employees.
That’s really just a “good start” at everything you need to be thinking about when it comes to planning for your business’s future. If you don’t have someone that can answer all these questions for you, we invite you to call us at 423-207-2497 or email us at info@southerpb.website.