Top 5 tax tips for SMBs
Tip. 1: Always Use EXACT Name of the Company.
“Using the EXACT name of the company on all legal documents is crucial to protecting your business. For instance, if you sign a lease for Tall Buildings, Inc., make sure you include the “Inc” (not just Tall Buildings). In a worst case scenario, if the owner of the property decides to evict or sue you for trespassing, the property owner could win based on the title discrepancy (i.e. asserting that your company name does not match the company that entered the agreement),” said Stuart Bronstein, On Call Attorney, Rocket Lawyer.
Tip 2: Maintain Corporate Formalities.
“Keep your business accounts and personal accounts separate. If you employ an out-of-state contractor or employee, make sure you use the proper tax forms,” said Bronstein. “If you don’t follow the rules and an employee or contractor sues you, you could be responsible.”
Tip 3: Protect Yourself from Personal Liability.
“For incorporated and unincorporated businesses, acquiring liability insurance is always a best practice. That way, you can ensure you’re protected if an employee or customer gets injured or has an accident at your place of business,” said Bronstein.
Tip 4: Incorporate in the State You Live in.
“To save a few bucks, many first time business owners are tempted to incorporate in states that don’t have a corporate income tax (i.e. Delaware, Nevada, etc.),” said Bronstein. “For most small business owners though, incorporating in corporate income tax-free states results in more hassle than cost-savings. While these states may provide tax breaks for businesses, SMB owners are still subject to annual fees, as well as fees and taxes from the state where the business is physically located. Unless you’re ready to move your SMB to Delaware, gaming the system is a lose-lose situation.”
Tip 5: Ship Your Inventory from Your Physical Business.
“If you’re selling tangible property be cognizant of where your inventory is located. For instance, if you have a supplier in Nebraska, don’t let them ship directly to your customers. Make sure that inventory is shipped directly from your business, so you don’t get dinged twice,” said Bronstein.
