Limit your tax liability
A clear understanding of the rules can significantly reduce your tax bill.
Whenver you are with business, we're in your community ready to lend you support.
When individuals are responsible for small business income tax
The simplest small business structure is a sole proprietorship. For income tax, the sole proprietorship owner accounts for the money they made or lost in the business on their personal tax return.
A partnership, for which there are two or more owners, is considered a pass-through entity. Earnings and losses are passed through the company to the individual owners. Each individual in the partnership declares their earnings or losses as part of their personal income tax return.
A Limited Liability Company (LLC) structure protects the personal assets of its owners in the case of bankruptcy or lawsuits. The profits and losses of an LLC are passed through to the personal income tax returns of any owners.
Keep good records
You’ll need to get organized with your record keeping. If it’s not a strength of yours, consider hiring help. Keep track of your business expenses as they occur. Save receipts. If you have to scramble to account for expenses at the last minute, you’ll likely miss some of your deduction opportunities. It’s also important not to commingle your business and personal funds. Keep separate bank accounts and pay for purchases and expenses from the appropriate account. This will help to keep your records accurate and avoid having certain deductions disallowed.
Be clear about your ask and offer
How much money are you seeking? Research your financing potential so that you have a specific ask and offer.
Know your audience
Present your business plan to lenders and investors that are good fits for your idea. Learn what types of products and industries they might consider and what kind of money they might be willing to lend or invest.
Preparing Taxes
Keeping your financials organized and up-to-date are important parts of starting a business. Consult our resources for insight on how to get prepared.
Partner with M&T Bank
M&T’s Business Banking Specialists are ready to offer you support at any stage of your business. Get to know the advantages of being an M&T Business Banking client.
