5 Common Mistakes by New Businesses- Part 1

Joe starts Barco, a new dog food company. Someone tells him he should incorporate to avoid liability. So, he does that under the laws of his state in January. He makes a profit the first year of $100,000. At that point, he goes to his accountant and says, “gee, you should have been a subchapter S corporation. You could have saved $15,000 in taxes”. “How do I do that?” Joe asks. You had to file a Form 2553 within 75 days of when you started your business with the IRS. I can see if I can get relief for that, but, I’m not certain its going to work. Had he filed that one simple form he would have saved $15,000 that first year and been able to plan other things as well. This is Mistake Number 1 of start-up businesses.