There are three major tax mistakes that new entrepreneurs make. Are you making any of these mistakes?
Mistake 1: You forget to file a return.
Why would you do that? You're used to someone taking the taxes out of your check automatically, which doesn't happen when you own the business. There are not only penalties, but interest that you have to pay the IRS. Consider having someone file your return for you so this doesn't happen.
Mistake 2: You do not withhold enough money.
You think "That's my money," and you spend it, but when you get to the end of the year you’re surprised how much tax you owe. It is probably 22% or more that you actually owe the government. Along the way, you should be putting that 22% into a savings account so you have it at the end of the year. You can also pay your taxes quarterly, or even monthly, to avoid scrambling to find enough cash to pay taxes.
Mistake 3: You do not educate yourself on tax laws.
When you're first starting out in business, you don't realize tax laws work to the disadvantage of the individual. You should speak to your attorney and create an S Corporation for you to run your business through. That will allow you to write off expenses such as travel, education, even part of your home that you use for your business.
At TRADEway we talk about a lot of these things, because you want to understand how to legally pay the least amount of taxes you have to pay.