Many small business owners assume that the financial side of their business isn't significant enough to warrant the hiring of an accountant. However, many small businesses will also fair in their infancy, and few grow to be the large businesses that they could be. A lack of proper accounting is one of the main reasons why such businesses fail.
One of the most problematic aspects of accounting is tax accounting. Even for small business, poor understanding of taxes and the impact they have can be fatal. How can a CPA or tax accountant help with all this?
Figuring Out How Much Tax You Should Pay
Small businesses owners frequently make one of two mistakes. They'll either pay less tax than they're supposed to, leading to heavy penalties, or they'll pay more tax than they should, reducing their profits. Hiring a tax accountant can help you to hit that sweet spot in between where you only pay the right amount of tax.
The reason why many business owners struggle to pay the right amount of tax is that they're often unaware of things what benefits they're entitled to, what expenses they can write off, the category their business is placed in, etc. A tax accountant will help you to understand all that.
Lowering Future Taxes
If a small business owner does not get their taxes under control, this could easily be what causes them to sink. Surprisingly, many large businesses are able to legally get away with paying almost no tax. This is because such large businesses have people who are aware of the benefits they can take advantage of to reduce their tax obligations.
A tax accountant can help you to identify opportunities to lower the taxes that your business is legally required to pay. Being able to keep more of your profits can provide you with the funds you need to expand.
When your business is doing well, you'll be tempted to make certain changes to capitalize on this. However, any changes you make to your business to boost growth could have other unintended consequences.
One consequence you should be concerned with is that such decisions could lead to higher taxes. Even changing the form of your business from a sole proprietorship to a partnership could mean having to pay more taxes. A small business CPA can help you to plan such moves and decisions to limit the tax burden they could otherwise create.Share