1. Hire a qualified CPA.
Consider this a smart business investment not just some dead-weight cost. A top-notch Certified Public Accountant should be able to save you plenty more than his or her fee, given all the special tax breaks you can qualify for as an entrepreneur. Just be sure to find the right match. If you’re a sole proprietor, ask around for CPAs who have experience with this niche. Likewise, if you’re a C Corp, make sure your CPA is fluent in
C Corp tax issues.
2. Focus on the bookkeeping.
This isn’t just about keeping track throughout the year so tax prep (for you or your CPA) won’t be a nightmare. When bookkeeping is done well, it provides valuable insights into how your business is operating. That’s the info that helps you propel your business to the next level. If you don’t want to hire a pro, commit to using small-business bookkeeping (and more) software such as QuickBooks.
3. Invest in your retirement.
Whether you’re a young startup or an established business with big growth plans, retirement planning often gets pushed to the back burner. There is never an easy or good time to siphon off money into your retirement rather than reinvest in the business. But you must make this a priority. This year. No excuses. Sole proprietors might find a SEP-IRA all they need; the maximum contribution in 2012 is 25 percent of your income or a maximum of $50,000, whichever is less. A Solo 401(k) is another great option if you and a spouse are the only employees. Your contributions can again hit $50,000 if you meet certain requirements ($55,500 if you’re at least 50 years old), and you can even set this up as a Roth 401(k) so your withdrawals in retirement will be tax-free.
4. Pay your estimated taxes.
This is for the newbies out there, especially the sole proprietors. You’re responsible for paying estimated quarterly federal tax (and state where applicable). I mention this because so many fresh entrepreneurs slip up on this and then get slammed with a daunting tax bill. This is just one more reason to work with a CPA: Your pro should be on top of making sure you get your payments filed on time.
5. Know when to close the doors.
As much as I would love for all businesses to be a success, this is just not how it works. They key is to know when to say goodbye: if you are taking money out of your retirement plans to fund your business; if you have not taken a salary for months on end and you have been paying your bills with credit cards and making only the minimum payment; if you find that no matter what you have done to increase sales, etc., you are not seeing results. Then you have to find it within yourself to close it down. Tax time can be a good reality check. The biggest mistake people make is to throw good money after bad. One failure does not mean you will not have a success in another area.
— Suze Orman