If you mention tax to anyone who is self-employed, you might find that it is enough to make them start sweating. There is no denying that taxes can be hugely complicated at the best of times, but if you need to sort things out for your company, then you might find that they can be incredibly tricky. Indeed, some entrepreneurs even shy away from their taxes for most of the year until the deadline for filing their tax return looms. They then panic and rush around trying to sort out their tax return in what little time they have remaining. Of course, that is not a great strategy as you are very likely to miss out on some of the various ways you can save money on your taxes. So, it’s best to take your time when preparing your taxes so that you can try and save as much as possible on your tax bill. Here are some business tax basics that can help you do just that.

 

Review Business Status

First of all, you might want to review your business status. When you first signed up as self-employed, you would have had to state whether you were operating as a sole trader or as a company. Most freelancers start off as sole traders before becoming a business after a few years. There are many tax benefits if you do set up a company, as it is a separate legal entity and will be completely independent of your personal finances, which is why many people do it.

 

Get All Your Paperwork In Order

It is really important that you sort out all the necessary paperwork for your taxes. For instance, you will need to use a W2 template if you hire employees so that you can get their monthly tax payments all sorted. You will also need to store all of your receipts and invoices, as these will be needed when it comes to filing your annual tax return.

 

Set Up A Payroll For Employees’ Tax

Once you do start to hire employees, you will need to arrange their monthly tax payments. This can be very complicated, but there is one process that can help you simplify the whole thing, and that is a payroll. More often than not, the HR department in a company takes care of its payroll, but it should be easy enough for you to get the hang of if you don’t yet have one of these departments. There are even lots of payroll software that can do much of the admin for you.

 

Consider Hiring An Accountant

No one said that business tax would be easy. In fact, there are lots of entrepreneurs who struggle a great deal with it. If you are one of them, there is no need to panic as you can always hire an accountant to help you out with your taxes and bookkeeping. And that’s one extra load off your mind!

Make sure you know these business tax basics for your own company!