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5 Tips to Achieving Business Success and Tax Compliance

Being a small business IS a huge undertaking. There are many pros to being your own boss but there can also be a lot of pain points if you don’t do it right or miss a “piece” of what should be done. Here at Sidekick we are ALL about empowering you to be a successful, profitable business, which is why I’ve compiled five tips to achieving business success AND staying tax compliant. The tax year is over but it’s never too early to think about how you can improve your tax situation while also adjusting to be a better business. Check it out and of course, don’t hesitate to book an appointment, or shoot me a text to talk more!

  1. Organize.

    1. For small business owners this often is having a separate bank account. Keeping your personal and business transaction separate.

  2. Keeping your receipts.

    1. These can be electronic. The IRS does take electronic records now, so I highly recommend using some kind of system to keep track of your receipts. Receipt management systems like Expensify or QuickBooks online can help keep your transactions and receipts organized.

  3. Understanding business deductions.

    1. The IRS define business deduction add anything ordinary and necessary to your business. So that's really the lens that you have to look through in order to assess what is needed to operate your business. There are very obvious ones like office expenses or job materials and supplies, but there can often be overlooked expenses such as interest on credit cards or loans, mileage for driving to and from business related events or errands, professional development and or business-related travel. Another one could be your home office, if you work out of your home and have a designated space for your business, that is square footage you are able to deduct.

    2. The key is making sure it is ordinary and necessary. For example, if I'm a lawyer I probably don't have an argument for why I've had a clear and ordinary are necessary to my business, however if I am a yoga instructor, I have a much better argument to why a pedicure is necessary for me to properly operate and market my personal brand and service. On the other hand, it has to also be necessary. If I'm traveling for a business conference, and there's a Ritz-Carlton I can stay at but shortly down the way there's also a Hilton or a Holiday Inn, I most likely do not have a good argument as to why it's necessary for me to stay at the Ritz Carlton.

    3. These two perspectives are really the ones you have to look for, to be able to deduct business deductions for your particular business.

  4. Pro-activity

    1. There is a lot of pieces involved when it comes to running a business and the truth is that it's ever-changing. Your business needs are going to change as you continue to evolve, both as an individual and as a business. Because of this, it's really important to be proactive. Now what does that actually mean? It means that you have to be intentional about your business. You are your biggest advocate and the one with the best intentions for your business, clients, customers and team. As a result, it’s up to you be proactive for what you are working towards.

    2. You can be proactive by doing your research, asking questions, working with vetted professionals, hiring a business coach or sometimes even bartering to get you to your goal. Setting goals is a great way to be proactive as well. You can’t move in a direction you don’t have a path to.

    3. When it comes to your taxes this is especially true as well. A good way to be proactive with your taxes is to estimate what you what your tax liability could be. The easy blanket percentage to save for taxes is 25 to 30% of your net income your net income equals sales minus expenses. There's a lot of other factors that go into estimated taxes, but if you save 25 to 30% it should get you very close or above what your estimated liability would be.

  5. Dig into your numbers.

    1. Numbers can be very overwhelming especially when it comes to business operations, however, if you are looking to get your business to the next level, your numbers are going to be the foundation to your success.

    2. Understanding things like average sales per customer, your ROI on advertising and marketing your conversion rate your retention rate your profitability, your percentage of income numbers, and lots of other KPI's, will allow you to monitor, review and manage your business growth and direction. Shifting from being just an owner to an intentional CEO, requires you to start paying more attention to your numbers. Understanding them more will allow you to make better operational decisions based off of data and not just feeling. There is a formula to business success, but the details are a little bit different for everyone. We all want different things out of our business, and each of us have operations that work in different ways. Yet, the foundation is the same, the main parts are the same. Your numbers are what help to fill in the details.

Use these tips as a starting point to begin growing a business that you envision and watch it begin to take shape!

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