Our federal income tax system is a pay-as-you-go deal. The "pay" part is through the monthly voluntary withholding amount we authorize our employer to take out and pay for us.
But what if you are self-employed? You can't wait until the end of the year and pay everything at once. Besides, you will also have to pay an additional approximate 15% self-employment tax (half of which is deductible).
The reasons every company needs a Chief Financial Officer are many and complex. But they boil down to this: No matter what business you're in, your business involves money. The CFO is a specialist who is trained in every aspect of the financial segments of your business. Here are 3 good reasons for your company to hire a Chief Financial Officer.
While many companies are focused on net profits, cash flow is actually a much more important figure for business owners most of the time. While the profit may be used to determine the valuation or the taxes, cash flow is the real money that can be used to pay expenses, payroll, bonuses and make investments. It is the cash and cash equivalents that actually enter the business minus the same assets that go out. For that reason, business owners need to be concerned with this number above all else.
Starting a business can be as costly and daunting as it is exhilarating and lucrative. While it's true that "the best laid plans of mice and men often go awry," it's equally true that prudence ranks supreme among the virtues.
Whether your idea sprouted from a lifelong trade or a nicely-timed niche, your success in 5, 10, or 20 years depends on how well you plan ahead. Step one in that planning should be start-up costs.
Simplify tax time and add peace of mind around any potential audit investigation by maintaining these documents on file. Whether you prefer paper records or electronic is up to you. Just make sure you have these records in place for 7-10 years. Erroring on the side of caution here is not a bad thing.