Launching a startup can be as about exciting as putting a raft into the rapids of the Colorado River.
The ride starts in slow calm waters where time seems to float lazily by. Then, there is a thundering echo in the distance and before you know it choppy white-capped water with menacing sharp rocks threaten to tear your raft apart. Sometimes those rocks lie just below the water, sight-unseen making them even more dangerous.
In the heady world of startup, in the thrill of the ride, its easy to forget there are big hazardous rocks, lurking unseen to crash your business without a moment’s notice.
And just as you want to consult your river guide to prepare for the rocks before you hit the white-water. you’ll want to sit down with the river guides of the business world – an accountant and in some circumstances, a tax attorney. Hiring these guides to review your business practices can help you save thousands of dollars in taxes. How? Read on to learn more.
The Sole Proprietorship Tax Bill
Many entrepreneurs launch their business as a sole proprietorship. Once their business is up and running, they are often hit with a huge tax bill that could have been avoided (in most circumstances) had they consulted with a professional on what business entity and accounting practices would best suit their needs to take advantage of deductible business expenses.
I recommend you obtain professional advice regarding your business entity type before the final quarter of the year. If you act now, you could possibly save yourself thousands of dollars. Note, there are several repercussions that can arise for failing to pay business taxes. You do not want to have your business shut down or be encumbered with a tax lien due to your failure to consult with a financial expert.
In addition to choosing the appropriate business entity for tax purposes, it is also important to choose one for liability protection as well. For example, forming a corporation can protect you from personal liability if your business is sued. This means that your personal assets will not be subject to the lawsuit because you are protected under the corporation. This can also save you thousands – and in some cases – millions of dollars long term.
Several attorneys and accountants provide free consultations to entrepreneurs needing advice on what business entity they should establish. I recommend you ask other business owners in your community for a referral.Kymeshia Morris Contributor and Legal Expert About: Kymeshia Morris