Every new businessman deserves a break. A first time entrepreneur needs all the help he can get. This includes tax filings and deductions. In the interest of protecting new startups, there are several rules and regulations which a new business can take advantage of in order to pay less taxes. For somebody who is just starting out, here are some tips which can be useful during tax time:
1. Filing extensions. It is not a tactic which is commonly availed, however, it is possible to ask for a filing extension. On the last day of filing, you can request for an extension. The extension will give you six months to comply, effectively moving your tax due date to October. This can be a big help for cash-strapped companies. In addition, and specially for new businesses, they can roll their cash and squeeze a bit more earnings before paying taxes.
2. Don’t Pay Tax on Out-Of-State Sales. You need to confer with your tax professional about out-of-state sales. Some states do not have taxes on out of state sales. Simply put, if you sell and deliver to different states, it is possible that those sales are not covered under your state’s sales tax. Your tax professional would be the best person to advise you on the pertinent laws.
3. Estimated taxes. April 15 is the last day you can pay last year’s taxes without any penalties. It is also the last day for fiing estimated taxes for the current year. The rules may be a bit complicated, however, there is a way to pay only the minimum required amount. This does not mean that you would not be paying taxes later on. However, a lower payment on the estimated tax for the year means more cash on hand which can be used for the company’s operations. By paying taxes early, you can pay less now, and pay the full amount on the actual taxes later on.
4. Pay by Credit Card. Cash and check payments are not the only way to pay taxes. You can also use your credit card to pay your taxes. Saving on this kind of transaction might be hard to understand. However, there are several points to consider this mode of payment. First off, you are deferring actual payment using your business’s cash. For another, because you used your credit card for a business transaction, you can also use the associated charges and interest as part of your operating expenses. By deferring the payment, you can roll over your cash until it comes time to pay your credit card bill. Ask your Tax Preparation Mason professional on how to best use this method.
5. Accelerate Your Depreciation. You need to confer with your tax professional regarding the best way to handle depreciation. Different equipment would have different depreciation rates. The rates themselves are not hard and fast rules, but ranges for length of time an item can be depreciated. It is possible to shorten the depreciation period, and include these as a depreciation expense. In the same manner, there are some office equipment which can be expensed out as a whole. Although these items would be used for several years, these can be considered as a capital expense and have a one-time write off.