New small business owners can feel overwhelmed with the additional tax reporting requirements. Here are a few basic tips and reminders to set you in the right direction so you can avoid possible problems:
First, keep good records. Whatever system you use… use it regularly, don’t wait until the week you do your taxes.
Deposit federal employment taxes on time and according to your appropiate schedule. These taxes are also called the trust fund taxes.
In order to cover your own income tax and social Security self-employment taxes, start making estimated quarterly payments. This will make your yearly tax time easier and you wont seem so overwhelmed by a large tax bill all at once. Properly classify your works are employees or independent contractors as required by law. Dont be tempted to do what the work wants or what you think will be easier for you. Misclassification can cost you fines and back taxes. Even a small business should consider tax help when filing your Schedule C for the first time. Consider filing and paying your taxes elextronically to save yourself some time.
Finally, have back ups of your financial and tax records in the event of a disaster.