Turning ideas into products is not an easy thing to do. Starting a company to help make your best ideas into products and services customers can benefit from can be even trickier. There are a lot of challenges to tackle when you’re starting a new company. Among those challenges are getting your finances in order and making sure taxes are handled properly.
Whether you’re already a startup owner or you are in the process of starting a company, there are a few important things to know about taxes. We are going to review the top three of those things in this part.
Claim Your Startup Costs
There are a lot of expenses that you’ll have to deal with when you’re trying to convert an idea into a working product. There are also costs associated with setting up a company. Fortunately, you can actually claim these startup costs against your taxes.
Any cost associated with getting the company off the ground is actually tax-deductible. Marketing costs, advertising costs, and even the petty expenses you have to absorb when you’re out meeting clients or investors, are all eligible to be included.
Even better, the maximum amount you can claim on your first year is $5,000. On top of that, you still have the option to roll over the startup costs for up to 15 years if they are more than the maximum amount allowed per year.
Understand Your Taxes
There are reasons why a lot of startup owners are pursuing their own online master of science in taxation from reputable universities such as Northeastern University; well, aside from the fact that the online course is very accessible and flexible, of course. Startup owners need to have complete grasp of taxation and the taxes they have to absorb when starting a company.
Those who have completed their MST online degree are also filling strategic positions in a lot of top startups we have today. For a company trying to be lean and efficient, being able to optimize taxes and keep finances in order could lead to a big competitive advantage. In today’s booming market, every competitive edge is worth pursuing.
Keep Track of Supplies and Equipment
Last, but certainly not least, never forget to separate supplies from equipment. A lot of startups make the mistake of mixing these two together. While it may seem simpler to manage the two this way, these startups are actually missing out on tax deductibles and other advantages.
Instead, know when to classify an item as a supply or equipment. You can actually deduct up to $25,000 worth of equipment purchases. You can’t do the same with supplies, since they are regarded as pure expenses. Don’t forget that there are plans to increase the equipment deductible to up to $500,000, so be sure to keep your books in order to take advantage of future tax changes.
These are the three important things to keep in mind about taxes when you’re running or starting a company. Get that extra edge your startup needs by managing taxes properly and be that much closer to success.