By Bert Seither, Vice President at 1-800Accountant
If you’re planning to take the dive into launching a new startup business, one of the first people you should have on speed dial is an accountant. There are so many tax and accounting implications that you must handle when officially becoming an entrepreneur. And, you certainly don’t want to mess with the IRS!
Here are some reasons why owners of startups should use an accountant:
- Business taxes come with more rules and requirements.
Individual taxpayers commonly submit Form 1040 to the IRS each year when filing their personal income taxes. However, in the realm of startups and small businesses, there are additional rules and tax forms that must be submitted to Uncle Sam for the purposes of reporting business income and paying business taxes. An example is filing Form 1120S for certain S corporations. You certainly want to make sure you cover all tax-filing and payment requirements for your startup, so let an accountant handle these additional, time-consuming requirements.
- Unique tax-filing deadlines are in place for startups.
Unlike the April 15th tax deadline all Americans are familiar with, owning a startup often comes with additional tax deadlines that complicate your calendar. Estimated taxes paid quarterly throughout the year are a staple of being your own boss. Estimated tax payment deadlines fall on January 15th, April 15th, June 15th, and September 15th. Another filing deadline for owners of corporate entities falls on March 15th when corporate taxes are due. These are just some of the additional tax deadlines faced by entrepreneurs who own startups. Working with an accountant can greatly ease your mind to ensure you meet all filing deadlines and requirements so that you don’t face any late-filing or late-payment penalties.
- Penalties are on the books for failing to file and pay business taxes.
Like penalties for failing to pay and file personal taxes on time, the same is true for failing to cover your payments due for business taxes. The last thing you want is to incur a hefty failure-to-file or failure-to-pay penalty on top of your large tax bill because you missed a deadline. This is where an accountant can benefit you by making sure you file every return you’re supposed to in a timely fashion.
- There are tax deductions and credits for startups that aren’t available to individuals.
Far more tax deductions and tax credits can be claimed by startup owners that are simply unavailable to individual taxpayers who are not self-employed. These tax-saving measures can significantly reduce how much you owe Uncle Sam each year, and therefore can help you hold on to more of the hard-earned revenue your startup generates. Business tax deductions include the home office deduction, deducting startup costs, the vehicle deduction, the meals and entertainment deduction, and a write-off on research and development. Business tax credits include those for purchasing energy-efficient items and those for hiring certain types of employees. To be guaranteed that you claim all relevant tax-saving measures, having an accountant by your side is a must. You’ll be amazed at how much money you’ll save.
- More money is typically involved in business affairs.
Taking home a paycheck every 2 weeks from your employer through a W-2 job is fairly basic in the accounting world. However, when you earn 1099 income and work for multiple employers in different locations through your startup venture, your tax situation immediately becomes a little more complex. In turn, there tends to be more money involved in a business, whether it’s your revenue, your expenses, or how much you should pay yourself and your employees. Accountants can play a major role in assisting small business owners with their business finances. You will enjoy a much smoother ride in terms of how to handle the money in your business when you work with an accountant.
- Accountants can save small business owners so much time.
They say running a startup is a 24/7/365 proposition – and it’s no joke. Entrepreneurs are constantly tied down to working on their businesses. The last thing they want to do is pour over invoices, receipts, spreadsheets, bookkeeping records, and payroll information. This is where an accountant can step in and free up a large amount of time for an entrepreneur. You’ll be able to focus on making money by doing what you love instead of worrying how much of it you’re supposed to send to the IRS each year.