Tax Considerations When Your Business Grows
Is your business quickly growing? First, congratulations on the success of your business. Now, what are you going to do about the tax side of your business growth? As your business grows, your taxes will change as well—so be sure to keep in mind these tax considerations.
When to Incorporate
One question we hear from small business owners is when they should incorporate their small business. In truth, the answer deserves a much more in-depth business consultation, but in short the answer is now. Legally, any time is a good time to incorporate your business because you move from unlimited liability to a limited liability. From a tax standpoint, it’s best to incorporate your business on January 1. This makes it so all business activities in the year are done as an incorporated business and not half the year as a sole proprietorship.
Systems for Better Tracking
As your business begins to grow, you will need systems in place which allow for the proper tracking of receivables, costs of goods, vehicle depreciation, etc. This is why it makes sense to learn the ins and outs of a record-keeping system like QuickBooks or to partner with a bookkeeping service. To learn how to use QuickBooks, we suggest you take some QuickBooks training courses now.
Number of Employees
Obviously, as your business grows you’ll need more employees. As you have more employees, you will be paying more money to those employees and the government. This introduces more work on the books when it comes to tax season as well. Consider outsourcing work contractually to help lessen the tax burden of paying the state and local taxes and other payroll related items each paycheck.
Taxes Get More Complicated
When starting out as a single employee working for yourself, taxes were easier. You could take your taxes into a business tax accountant one time and usually be done your taxes for the year. As your business begins to grow, your tax situation is going to get exponentially more complicated. This is why one tax consideration when your business grows is to partner with a Maryland accounting service.
For more help with preparing for business growth, or for a Maryland business consultation with an experienced Maryland finance expert and tax accountant, get in touch with CFO Source today. CFO Source has over 25 years of experience in financial management and is here to help you succeed. Give CFO Source a call today at 410-242-0526, or fill out the contact form on our website!