Incorporate on January 1
Anytime’s a good time to limit liability through incorporation, but the experts recommend the start of the year as a particularly beneficial time to pull the trigger.
Incorporate on January 1
Rocket Lawyer Says: "With a filing date of January 1, you’ll save time when filing a tax return for that year, because the business doesn’t need to file two separate tax returns for the unincorporated entity and one for the new C-Corp, S-Corp, or LLC."
Choose your structure wisely
Tax attorneys recommend that you don’t let the CPA pick your business structure just for tax savings. Talk to an attorney about liability as well so that you balance liability and savings equally in the decision.
Choose your structure wisely
Rocket Lawyer Says: "There are many factors to consider when choosing between a C-Corp, an S-Corp, or an LLC, and while many business owners decide to incorporate based on potential tax savings, it’s also important to consider liability protection."
Let Leaders Know Their Risks
As you legally structure the company, be aware of the liabilities you place on the heads of owners or signators. They’re personally responsible for coughing up the business’ unpaid taxes–and the penalties that accrue when they’re not paid.
Let Leaders Know Their Risks
Rocket Lawyer Says: "So, before you decide to put your children, spouse, or other employees in these positions, make sure you understand the unintended consequences that may arise as a result of this action."
Classify Employees And Contractors Carefully
You can’t have your cake and eat it too. If you claim employer credits for an employee and then try to shirk your payroll tax obligation because you classify them as a contractor, that sends big red flag to the IRS, Rocket Lawyer warns.
Classify Employees And Contractors Carefully
Rocket Lawyer Says: "To prevent this situation, think about the role you want the new worker to fulfill and then put the appropriate relationship in writing with an Independent Contractor Agreement or an Employment Agreement. Then, stick with it, from paying payroll taxes (if applicable) through to the tax credits you claim."
Get Ready For Itemized Tax Reductions
The coming year could be tricky for some businesses as lawmakers talk about cutting tax deductions in certain areas. It will pay to keep especially meticulous track of expenditures and get ready for potentially higher tax bills.
Get Ready For Itemized Tax Reductions
Rocket Lawyer Says: "The Joint Taxation Committee has recommended cuts to charitable deductions, mortgage interest deductions and state and local tax deductions. The likely effect of this is higher costs for business."