Important Tax Issues to Remember When Starting a Business

At Hogg, Shain & Scheck, we are passionate about helping entrepreneurs to launch successful and sustainable businesses. We have been privileged to meet incredible innovators whose ideas could revolutionize industries. However, before your startup or small company can takeover the market, you need to be sure that financial negligence does not hamper your earning potential.

When structuring your new business, don’t rush the pre-planning. Make rational decisions based on research, so that your startup business starts on the right foot. Forbes takes a look at the ten most common legal mistakes that entrepreneurs make. These mistakes often cost a business owner time, money, and sometimes even their enterprise altogether.

Partnership agreements

You need to have an ironclad deal with your partners to ensure that no animosity or misunderstanding arises down the road. Look toward the future where one partner may wish to go his or her separate way: Think about how each party will be compensated, who will own what, and how will this affect the business. Be sure to protect your best interests and the best interests of your company. Document your discussions and retain all of the necessary paperwork that may be called upon should any aforementioned issue arise.

Incorporate of your business

Don’t make easy mistakes that may be hard to overcome down the road. Oftentimes, when a startup begins operations, the owner(s) will fail to incorporate their business. If you choose to remain a sole proprietor or general partnership, you expose yourself to a variety of issues. Should any creditor sue your business, the funds will come directly from your pocket and the pockets of your partners. File documents with the proper governmental authorities, and get the proper licences to become an official business. Setting up these entities may originally take up time and finances; however, the benefits that you may reap following incorporation will far outweigh these initial efforts.

Once your business is up and running, protect yourself with contracts. When you are working with customers, be sure to create a “standard form contract” that will protect you against liability, should a product or service not meet expectations. Make sure that you seek proper counsel when scripting these pages. Be clear and concise, and do not leave room for negotiation or backpedalling.

Be careful when you sell your shares. If you do not comply with government regulations when selling a share in your company, you will be fined and your business will suffer. Do not take risks that expose you to financial penalties. Be sure to consult a knowledgeable accounting team before committing to any potentially harmful practices. This level of caution should also be extended to employment and client documentation. Protect yourself against loss of information, intellectual property, and funds. Be sure to have your employees sign the necessary legal and financial documents to protect you from unforeseen issues.

When you are starting and managing your business, you will have to be wary of a variety of tax considerations that will affect you. An accountant will help you to manage the various sales taxes that must be attached to each of your products. Depending on where you sell your products, you may have to take into account multiple taxes. You can also look at how best to approach tax incentives and manage the taxation processes that will affect your business.

At Hogg, Shain & Scheck, our team will help to paint the big picture for you. We will help you to create a long-term strategy that will account for all of the financial elements of your business, and how they may be impacted by legalities. If you are starting a business, contact our accounting office and arm yourself with seasoned accounting professionals who will prioritize your best interests.