How to do Tax Planning for Your Small Businesses

Tools & Resources

Get the Full Course

Create your free Business Center account to get access to the complete Small Business Startup Course and all the worksheets.

Get Started Now

Resources

• Best Business Planning Software: LivePlan 
• Free Accounting Consultation: 1-800 Accountants
• Best LLC Formation Service: Northwest 

Articles

• Small Business Accounting

Simplifying Tax Planning for Small Businesses

This section breaks down the complexities of tax planning, providing guidance on understanding different tax brackets, deductions, credits, and strategies to minimize tax liabilities. We’ll also cover the importance of compliance, helping you avoid costly penalties while maximizing your financial efficiency.

How to Do Tax Planning for Your Small Businesses – Transcript

When planning initial financial projections for your small business, one of the most fear-inducing and not fun things to think about is taxes. But not to worry — in this video, we’re going to be showing you how to account and plan for your small business ideas taxes as quickly and easily as possible. Really, it should only take a few minutes of your time. 

Hey everybody, Will Scheren here from Small Business Startup Guide by TRUiC. This video is part of a larger course dedicated to helping small business owners cut through the noise and get to the essentials of starting and operating their businesses. If that sounds really useful to you, be sure to like and subscribe. 

Taxes are mandatory contributions levied on individuals or corporations by a government entity, whether local, regional, or national. And unfortunately, there are a reality that small business owners need to account for when building out financial projections for their businesses. You may have heard that tax laws can get pretty complicated, and they definitely can. But as a business owner, you won’t need to get in the weeds with them. 

One of the things every business owner should do early on, even before getting a bank account for their business, is meeting with an accountant. To ensure that your business’s accounted for all of its needed tax considerations, simply talk to an accountant before starting your business and explain to them all of the products or services that you intend to sell and where and how you intend to sell those products and services. Since taxes can be so complicated, we highly recommend outsourcing all of the tax functions of your small business to a professional accountant. 

With most accountants, initial meetings to set up your business structure and plan for your taxes are free in hopes that you’ll rely on that accountant for any needed bookkeeping and to file your taxes at the end of each year If your business turns a profit. We recommend you work with someone locally. Someone who does a good job of picking up the phone to answer any questions when you call. In most towns, an accountant is just a Google search away. 

We’re going to be covering what questions you should be asking your accountant in your initial meeting later in this course in just a few videos, but for now, you should just know that one of the questions that you’ll need to ask them is what percentage of your profits you’ll need to pay in income taxes. You should also ask them about any needed sales tax that you should be charging for your products and services and how those tax rates could change if you sell or ship your products to various places. 

After you’ve received tax rates from your accountant, you’ll want to plug them into LivePlan.com to include in your financial projections. To do this, open up the “Forecast” tab and then click on the “Taxes” subtype. Click on “Set Tax Rates” and add the total estimated tax rate that your accountant provides you and the income taxes, and how frequently your business will pay taxes. Then click on the “Sales Tax” tab and select which of the revenue streams you created will be required to pay sales tax and enter an average sales tax for each of your revenue streams, as well as the frequency in which your business will need to pay taxes. 

As a note, employee-related taxes, like payroll and social welfare taxes, are covered on the personnel step in LivePlan.com Other taxes, such as property tax, are generally best added as regular expenses. After accounting for income and sales tax, you’ll see that your dashboard is adjusted accordingly. 

In the next video in the course, we’ll be explaining how dividends work with small businesses and how to account for them as you plan your financial projections. 

This video is part of a step-by-step course that gives business owners all of the essential information to start and operate their business. We’ve provided a link for you to get access to all of the free and discounted business tools we mentioned in this course below this video. 

Be sure to like and subscribe to get more of this content. We’ll see you in the next video, and if you have any questions, let us know.