It is very important to understand that an essential component of operating your own business also requires managing the tax implications related to your business and your own income tax filings.
Whether you operate as a sole proprietor or a corporation, it is vital to ensure you are being provided tax planning for your own income tax position. Your accountant should have discussions with you regarding the implications as a sole proprietor. Especially if you have invested money into your business, and the most tax efficient way for you to recoup the investment.
Often when a person starts their business, they don’t do a lot of planning. Planning can play a critical role as probably one of the most under-estimated tools in designing your long-term goals. If your business grows quickly and requires a large personal financial investment, then ensure you have reviewed the tax implications of this investment and how to draw it out of the company at a later date with a minimal tax penalty for your own income situation.
Operating your own business can be exciting, invigorating and can consume your every hour, so you don’t want your time to end up costing you more in taxes after the business becomes successful. Always plan ahead!