SOURCE: Marks Paneth & Shron LLP

Marks Paneth & Shron LLP

May 16, 2013 10:00 ET

Entrepreneurs Beware: What Makes You Great at Starting a Business Won't Help You Run It

Great Ideas Aren't Enough, Entrepreneurs Must Be Able to Manage the Financial and Tax Side of the Business, Says Marks Paneth & Shron Advisor

NEW YORK, NY--(Marketwired - May 16, 2013) - What makes people good entrepreneurs frequently makes them bad at running the financial side of the business.

A new video from New York accounting firm Marks Paneth & Shron LLP (MP&S) highlights the gap between developing and finding a market fit for a new product and developing the financial foundation to sustain and scale the business.

In the video, "Having a Great Idea Is Not Enough," senior consultant Jeanne Goulet explains the landmines entrepreneurs should avoid when they launch businesses. For instance…

  • Not filing taxes. Even if a business doesn't have income, it's still important to file a federal tax return for the company. If you don't file, the IRS or other tax authorities can come to the company ten years from now demanding back taxes, and you have no way to prove that you don't owe anything because a return was never filed.

  • Not collecting sales tax. If you don't collect sales taxes from your customers, you are still responsible for paying them. In fact, if the company doesn't have any net income, you, the founder of the business, will be responsible for paying taxes out of your own personal funds or assets.

  • Being double taxed. If you're an Internet-based business, you may be paying tax twice on the same income. Knowledge of inter-state and international tax agreements will help you save money.

  • Mislabeling employees. Many companies label employees as independent contractors to avoid setting up a payroll system. This means you aren't paying unemployment taxes, and with state governments carefully watching this, you could be charged fines and penalties.

The video also highlights "smart moves" that can help businesses save money, including…

  • Accelerate deductions and defer income. Being strategic about this may mean you can pay your taxes later.

  • Pay a lower tax rate. Arbitrage your tax rates by getting deductions at a 35% tax rate and then recognize the income at the capital gains tax rate (15%).

  • Build up tax credits when you have losses. These can be used to offset taxes when you're profitable.

  • Look at state tax refunds even if you aren't paying taxes at the state level.

Entrepreneurs who are aware of the financial and tax side of their businesses will not only save themselves time by not dealing with government bureaucracy but also free themselves up to develop their products and markets.

The video is available at http://www.markspaneth.com/publications/having-a-great-idea-and-potential-product-are-not-enough.

To speak with Jeanne Goulet of Marks Paneth & Shron or for more information, please contact Katarina Wenk-Bodenmiller of Sommerfield Communications, Inc. at (212) 255-8386 or Katarina@sommerfield.com.

About Marks Paneth & Shron LLP

Marks Paneth & Shron LLP is an accounting firm with over 500 people, of whom nearly 65 are partners and principals. The firm provides public and private businesses with a full range of auditing, accounting, tax, consulting, bankruptcy and restructuring services as well as litigation and corporate financial advisory services to domestic and international clients. The firm also specializes in providing tax advisory and consulting for high-net-worth individuals and their families, as well as a wide range of services for international, real estate, media, entertainment, nonprofit, professional and financial services, and energy clients. The firm has a strong track record supporting emerging growth companies, entrepreneurs, business owners and investors as they navigate the business life cycle.

The firm's subsidiary, Tailored Technologies, LLC, provides information technology consulting services. In addition, its membership in Morison International, a leading international association for independent business advisers, financial consulting and accounting firms, facilitates service delivery to clients throughout the United States and around the world. Marks Paneth & Shron LLP, whose origins date back to 1907, is the 32nd largest accounting firm in the nation and the 16th largest in the New York area. In addition, readers of the New York Law Journal rank MP&S as one of the area's top forensic accounting firms for the third year in a row.

Its headquarters are in Manhattan. Additional offices are in Westchester, Long Island and the Cayman Islands. For more information, please visit www.markspaneth.com.

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