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Sacramento, CA Accountant for Start Ups

Our Sacramento accountants for start ups provide a wide variety of business tax planning services for start up companies in California. Call today.

If you are interested in establishing a business, you are likely aware of the dedication and hard work it will take to make your business successful. There are various elements that go into creating a profitable business like choosing the right business structure and ensuring that you keep detailed records. Fortunately, you do not have to handle these tasks alone. If you require financial assistance for your startup, contact an experienced Sacramento accountant for startups. The accounting team at Cook CPA Group is ready to help you face the challenges associated with founding your own business. Our firm has worked with businesses in Sacramento, Roseville, and across the State of California, and we would be honored to work with you.

5 Tax Issues New Startups Face

When establishing your business, tax regulations are likely the last issue that you are looking forward to handling. However, creating a system to manage your tax liability will make it easier on yourself once tax season rolls around. The following is a list of common tax issues that new business owners will face.

Choosing the Right Business Structure

Selecting the business structure that works best for your short- and long-term goals are imperative for new business owners. Each type of business structure will have different benefits and also different types of tax liabilities. For example, C corporations experience double taxation; the corporation is taxed when profits are earned, and when dividends are distributed to shareholders. Whether you elect to operate your business as a corporation, sole proprietorship, or a limited liability company, you should perform thorough research to determine whether this structure works for you.

Start a Business Account

The commingling of personal and business expenses is one of the most dangerous mistakes a business owner could make. One issue that could arise from the commingling of assets is making errors on your tax returns because you have made it impossible to separate business and personal expenses. Another issue with mixing personal and business expenses may occur if your business is sued. If a court cannot find a difference between you and your business in terms of company assets, it is possible that the legal protections provided by your company will be ineffective. This means that a person may be able to win a judgment against you directly instead of against your company.

Learn What Costs are Deductible

Every potential business owner should know that some startup costs are tax deductible. The following is a list of deductible startup costs:
  • The cost of training employees
  • Expenses for legal fees
  • Cost of building relationships with vendors and suppliers
  • Expenses related to advertisements before opening your business
There are other startup costs that you may have access to depending on your circumstances; Cook CPA Group can help you explore these options.

Self-Employment Taxes

New business owners can sometimes make the mistake of failing to account for self-employment taxes. This is likely because most employees have taxes automatically removed from their paycheck during each pay period, meaning when they open a business, they may forget to pay these taxes manually. Self-employment taxes consist of Social Security and Medicare. A business owner has the option of paying these taxes on a quarterly basis or arranging a different type of pay schedule with the IRS. Failure to pay self-employment taxes will not only result in tax penalties, but it may also affect your retirement benefits further down the line.

Signing up for an Employer Identification Number

You may also need to apply for an Employer Identification Number (EIN) depending on how your business is structured. An EIN is used for various purposes like establishing a business bank account, filing electronic tax returns, applying for business licenses, and various other issues. If you are required to register for an EIN, it can be for several reasons. The most obvious reason is that your business employs others. However, you may also need an EIN if you structured your business as a C corporation, LLC, or a partnership. These are just some tax-related issues that the owner of a new business must contend with. Cook CPA Group can work with you to determine tax and accounting strategies that will help your business operate efficiently.

Contact a Sacramento CPA for Startup Companies Today

If you need assistance managing your tax liability, contact an experienced Sacramento CPA for startups. At Cook CPA Group, our accountants possess a great deal of experience managing tax issues for new business owners, and we are ready to work with you.