Whether you choose to go it alone or you hand over your
records to an accountant for tax preparation, how you keep your records is of
paramount importance for various reasons.
On the forefront of these reasons is the ability to see how profitable
your business venture is and without accurate records you are unlikely to know
the true extent of your expenses. But
profitability aside we all strive to shelter as much of our income from taxes
as possible.
Most tax shelters are useful if your timing is right but in
order for the timing to be right you need all relevant information available to
you so that your decision is an informed one.
Take for an example making contributions to a retirement plan, now there
are various options open for small business owners from Defined Benefit Plans
to Simple IRA, to name but a few. Both
the tax reporting requirement and allowable contribution will differ from plan
to plan. Knowing what your projected
income is for the next two to five years can sway maximizing your contribution
amount in Defined Benefit Plan, for the older business owners, to opting for a more
restrictive Defined Contribution Plan.
On the other hand younger people just beginning might find that a SEP
IRA’s minimal costs for maintaining a plan a more attractive.
No comments:
Post a Comment