one of the biggest mistakes small business owners make is their misunderstanding to pay the estimated tax, especially these who have gotten used to working for an employer. The latter took care of the bulk of your income tax withholding and Social Security and Medicare deductions. Below are some facts from the IRS Estimated Tax Guide to help small business owners understand the estimated tax.
What are Estimated Taxes?
America’s tax system is “pay as you go.”
Every small business owner wants to know how to legally minimize his or her tax obligations. You know that the tax code allows you to deduct costs of doing business from your gross income. You are taxed on your net business profit. How to maximize your deductible business expense to lower your taxable profit then?
What are deductible business expenses? You would think the IRS has a list, but the Internal Revenue Code provides little detail other than “There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business”.
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