7 Tax Tips When Starting Your Franchise Business
As you open your franchise – or start to think about opening your franchise – there is no doubt that finances are toward the top of your mind. From funding the franchise itself, to paying others, to supplying overhead, and paying taxes (hopefully on time), it's more likely that finances are never not on your mind as a budding business owner. This is normal, and it's a reality that will level out over time. As your business becomes more established, and you are more comfortable as a franchisee, these instances will become second nature. You'll develop a routine and streamline the finance process – from ordering, to paying taxes on a schedule.
However, that doesn't mean the idea doesn't still feel daunting at first. In order to get yourself prepped, and to have a steady idea of what you should be prepping for within your franchise, take a look at these proven tips. You can get them on your radar and start working toward a business of organized taxes for your growing brand.
1. Sign Up With or Talk to an Accountant
This one is simple, right? The accountant is a pro. You need their advice and should readily accept it. Talk to an accountant who is well versed in working with business owners, and even better if you can find one who works with franchisees. You should get their advice before you open in order to take any necessary first steps in preparation for Uncle Sam.
2. Follow the News
Even though a tax pro will keep you in check, it's a good idea to have your news consumption under control at all times. Be aware of what tax law changes might be around the corner, and how they could affect your franchise business. Though many headlines are far from reality and might never come to be, it's a good idea to know what's possible for your business' future and how your outlook can change.
3. Learn When Payments Will Be Due
When paying quarterly payments, you will want to know the time of year and date that your taxes will be due (January, April, August, and September). However, you first need to determine if you will pay quarterly payments, if it's better to provide lump sums once a year, and so forth. April tax dates can also change year to year, sometimes landing after the 15th.
4. Save Away Your Dues
No one wants to owe the IRS at the end of the year. While it can be hard to see that "extra" money in the account that sits unspent, you also need to be sure to set aside enough dollars that you can pay without penalties. If needed, open a separate bank account where those funds will be hidden from view. Whatever method will help you stow away money and keep the tax man at bay, use it in your favor.
5. Get Software to Help With Data
Even if you hire a great accountant, consider the use of your own software, too, or in tandem with what they are keeping up with as far as books, ledgers, or other data. You can never keep too many records, but you can absolutely under report. Stay on the safe side and keep track of all expenses, numbers, and so forth, to keep your business flush and prepared.
6. Don't Cut it Too Close
In deadlines or dollar amounts, you don't want to cut it close to cut-offs. Dollar amounts can always change, and you never know what type of snags might occur, and what type of timeline it might require in order to get it all sorted out. It's always good to have a buffer that can provide your franchise with some security, and yourself some peace of mind.
7. Protect Yourself Going In
Before you even open your franchise, you should look at various types of paperwork that are either required of your business, or needed to file and keep your franchise safe. Talk to a lawyer (or the accountant, once again), and learn what documents need to be signed and filed. What qualifications do you need to meet? What standings do you need to be listed under – and what do you have to complete in order to reach them? It's never a good surprise to realize your franchising business could be at risk – or even filed under the wrong qualification. Opt to do your research up front so you can ensure your taxes, among other areas of the business, are all in good order.
By Bethaney Wallace | Mar 08, 2019 | General Franchise Information