Tips to Avoid Tax Problems With Your Business

Some business owners mix their business and personal finances too frequently. When it comes time for taxes, intermingling these can be a problem! Right from the beginning it’s necessary to separate your business and personal finances. Here’s how you can peel your business away from your personal finances.

  1. Keep different bank accounts: An important first step for the IRS is that they check and see you if you have a separate bank account for your business. Not only is it important for taxes it also legitimizes your business to clients. When the fiscal year has ended, your total revenue and expenses will be in one spot. This keeps record-keeping simple, and if you ever get audited it will be easy to prove total expenses.
  2. Use a business credit card: A business credit card is good for building your business’ credit and it can give you an extra record for your books to prove to the IRS your income. The business credit card can provide an additional tax deduction as well.
  3. Information for when you file taxes: Having a bank account, credit card and great bookkeeping software such as Quicken, is typically enough to show that you are running a legitimate business. When you file, take into account what deductions you are going to claim and make sure you have proof for these, to avoid an audit. For example, if you had an office during the fiscal year, show proof of rent payments or ownership.
  4. File for the type of business that works best for you: Whether you choose to incorporate as an S-Corp, C-Corp or file as an LLC or Sole Proprietorship, make sure you decide which is best for you. This has special tax benefits and each makes sense for parti. Mikella CPA can help you with filing for the right type of business and any other incorporation procedures. Call today!

Mikella CPA
Phone: (512) 779-7747
Fax: (512) 276-6610
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