As entrepreneurs get ready to start a corporation, tax planning is essential and can lead to substantial savings down the line.
The Los Angeles Times recently offered small businesses tax advice to help them navigate the sometimes complicated waters of tax policies. Often entrepreneurs do not realize that they have to file a tax return even if their company has yet to earn any money. In California, for example, if a start-up registers as an LLC, an $800 payment along with filing a state income tax return is required.
The inundation of work associated with bringing a product or service to market can often lead to new business owners pushing tax issues to the back burner. Tackling the complex network of federal, state, county and city tax rules can be very difficult starting out. It is helpful to seek the assistance of professionals and get educated through free workshops and webinars offered by government agencies.
Some other tax information that is pertinent to start-ups include the ability to deduct most start up costs – this year the IRS will allow up to $10,000 to be written off. Select states offer a new jobs credit, allowing a new small business hiring its first full-time employees to qualify for several thousand dollars in state tax credit.
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