Yes, incorporation may reduce your taxes (in same cases). And, true, incorporation typically reduces your legal liability. But unless you really need a standard, old-style corporation, you should keep your accounting and your taxes simple and more straightforward by staying "un-incorporated."
Here's why: Incorporation means annual corporate income tax. And even if you're the only person working in the business, incorporation means annual and quarterly payroll tax returns. That's just too much paperwork for your new business.
If you worry about your liability, by the way, know that you have another option for protecting yourself legally. You can form an LLC, or limited liability company. You should get the same legal protection. And if you're a one-owner LLC, you'll be able to treat your business just like any other sole proprietorship, which means no corporate income tax returns and maybe no payroll tax returns.
Accounting Tip #2: Setup a Simple Accounting System
If you own and operate a business, you really do need a simple accounting system. Don't fool yourself. Invest the time (an hour?) and the money (about $100?) to get a simple accounting system like Quicken Home & Business or Microsoft Money Home & Business.
You'll need an accounting system to track your profits anyway. That's actually the law. Furthermore, by starting out with a good accounting system, you'll much more effortlessly capture tax deductions that will later save you money.
Accounting Tip #3: Use a Separate Bank Account for Your Business
You don't want to co-mingle your personal and business accounting. Get a separate bank account for your business. Use that account for your business's deposits and for your business's payments.
Only bad things happen, accounting-wise, when you pay personal expenses out of your business account and business expenses out of your personal account. For example, you'll miss tax deductions. You'll inappropriately count personal expenditures as business expenses. And you'll lose your ability to precisely measure how much money you're making or losing.
Accounting Tip #4: Make Quarterly Estimated Tax Payments
One of the responsibilities you shoulder when you become self-employed is paying quarterly tax payments using the 1040ES form (both form and instructions are available from www.irs.gov). But this makes sense.
Someone who is an employee doesn't have to worry about paying income taxes on their wages. Their employer automatically deducts taxes from their payroll checks and then remits that money to the Internal Revenue Service.
But you need to pay the income taxes on your business profit. And you should do so in quarterly chunks as the year progresses: one-quarter of your tax bill on April 15, another quarter on June 15, another quarter on September 15, and, finally in the next year, the last quarter on January 15.
In general, you'll owe a combined tax of about 20% to 25% of what your business makes. So you want to use your accounting system to regularly estimate your profits and then you want to set aside 20% to 25% of that profit in a savings account for later paying your income taxes.
If you make $80,000, for example, you'll owe $16,000 to $20,000 in tax. And you would pay $4,000 to $5,000 a quarter in estimated taxes.
By the way, the big headache to avoid here is not some annoying penalty. That's the least of your troubles, in a sense, if you don't make quarterly payments.
The big crisis is having April 15th roll around and then finding you need to pay a surprise $16,000 or $20,000 tax bill. Ouch.
Accounting Tip #5: Don't Put Personal Assets into the Business
And a final tip for keeping your accounting clean, simple and low-cost: Don't put cars, home computers and other personal assets into your business and then attempt write off the expenditure.
The accounting rules for expensing these kinds of "easily-used-for-personal-stuff" assets are cumbersome. You'll find the rules hard to follow and easy to break. And if your accountant charges for the extra work he or she needs to go to on your tax return, the money you save is embarrassingly modest.
Most new businesses don't make it past the second year. One reason these businesses fail is because few people know how to use Internet marketing. Article marketing allows business owners to advertise online without spending much money. Internet marketing with articles blows the theory that 'it takes money to make money' out of the water.
How Article Marketing Builds Your New Business
Writing articles for online distribution requires you to meet the rules set forth by the major search engines. Search engines, like Google for example, detail how important one way back links are to getting to the top of their list; heed their message!
Sure, you can exchange links with other sites like your own, but that isn't enough to get Google's attention. You spend a huge amount of time e-mailing people to ask about exchanging links and when it's done and told, you have basically canceled out the benefit of a link at all.
Internet Marketing and Distribution Services
One of the most cost effective ways to market a new business on the Internet is to submit articles to a directory service. Approximately 250 free and low-cost article submission distribution sites are at your fingertips through a simple search. All directory services are not the same, though. Select the one that offers you best features to suit your needs.
The Benefits of Using a Quality Article Distribution Service
Why submit articles to a directory for free publication? It's a cost-effective way to advertise a new business.
* Write about what you already know. * Build a network of back links to your website. * Get your articles published in e-zines and newsletters. * Establish yourself as an expert on the topic. * Generate traffic, increase sales and make more money from affiliate marketing. * Establish relationships with new clients. * Directories that are edited by people are fine-tuned for publication. * Choose from a list of categories and subcategories to place your article in. * An editor will make sure that your article is in the best category to get the most attention.
How Do Submission and Distribution Services Work?
Submitting an article to a directory service is easy. All you need to do is register, select a category and subcategories and paste the title, description and body of the article in the right places. Then fill in the resource or author box with valuable information about your new business; including a link to your website.
A submission and distribution service creates a win-win situation for webmasters. It is a powerful tool used in Internet marketing. It allows you to submit articles to a directory as long as they meet certain standards. Publishers search the directories to find free articles for their sites that fit in their niche and needs. The only stipulation for publishers is that the article must be reprinted in its entirety and must include a resource or author box.
It is the author box that is so important for business owners. Your name, expertise and a link to your website go there and then in front of thousands of targeted readers. It is a cost effective way to build your new business.
Article marketing continues to be the most cost-effective way to advertise a new business on the Internet.
Both Stephen Nelson & Brad Mcgovern are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Stephen Nelson has sinced written about articles on various topics from Finances, Setting Up Company and Tax Deductions. is the author of QuickBooks for Dummies and edits the. Stephen Nelson's top article generates over 90500 views. to your Favourites.
Brad Mcgovern has sinced written about articles on various topics from Network Marketing, Writing and SEO Articles. Brad McGovern is the Marketing Manager at , and offers advice and news of note to article marketers. Watch for. Brad Mcgovern's top article generates over 22200 views. to your Favourites.