Why Tax Planning is Important for Small Businesses

Tax compliance is a necessity. An effective tax planning strategy can add considerable value to your business. 

Taxation is a critical factor in the success and financial health of your business, and obtaining tax advice at the earliest stages of your company's development is advisable to prevent early mistakes that can have a lingering detrimental impact. 

Companies should pay attention to tax-related issues in the following areas: 

Registration 

New businesses must, in general, apply for a U.S. Federal ID number. Registration can be affected by applying online with the Internal Revenue Service (IRS). Registration for the following taxes should be considered: 

• Federal income taxes - 
• State income taxes – 
• Employment taxes - 
• Sales tax (on a state-by-state basis) - 
• Property tax. 

Depending on the nature of the business, other taxes may also apply. It may also be necessary to register with state regulators to gain the appropriate license or permit to undertake business in that jurisdiction.

Early-stage considerations 

• Seek early advice on the various taxes for which your company may be liable 
• Determine how you wish to set up the entity (for example, as a corporation or a pass-through entity) 
• Consider the taxation consequences of setting up operations or selling products in multiple jurisdictions and states 
• Determine if your personnel are employees or independent contractors 
• Consider the tax consequences of non-cash remuneration (such as share-based compensation) 
• Identify possible tax credits and incentives for which your company may qualify 
• Obtain external tax advice before any acquisition or disposal

Compliance 

• Ensure someone is responsible for tax compliance; this is an area where an external accountant or CPA may be of particular assistance
• Tax returns and payments of different tax types are due at various times of the year; ensure you understand the required tax filings and the associated payment calendar 
• Incorporate tax charges and payments into your budgets and financial projections 
• Timely withholding and remittance of employment taxes (federal and state) are critical to ensure compliance

Decimal helps you be tax compliant

The accountants at Decimal help ease the stress of the tax season with accurate and up-to-date financials. You’ll have year-round support and guidance from accountants dedicated to your business’s success. From compliance issues to missed deductions and credits, you don’t have to tackle your tax preparation on your own. Contact Decimal today and visit with an accounting specialist dedicated to your small to medium-sized business success.

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