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Anomaly CPA helps new business owners understand the key tax implications of launching a company. From choosing the right entity to leveraging deductions and credits, early tax planning protects cash flow and avoids penalties. Startups often miss opportunities such as deducting startup costs under IRC §162 or maximizing credits like the R&D tax credit (IRC §41). With proper record-keeping and guidance, new ventures can minimize liability and set a strong financial foundation. (Source: IRS Pub. 583, 2024; Based on anonymized Anomaly CPA client data, Q2 2025)
The entity you select determines liability and taxation.
Sole Proprietorship: Simple but no liability protection. Taxed as personal income.
LLC: Liability protection plus flexible tax elections.
S Corp: Pass-through taxation avoids double taxation, but owners must take a reasonable salary.
C Corp: Profits taxed at the corporate level and again when distributed as dividends.
Key takeaway: The right structure balances liability protection with tax efficiency.
Self-employment taxes: Sole proprietors and many LLCs pay Social Security and Medicare taxes on all net income.
Corporate taxes: C Corps pay federal corporate tax. S Corps pass income through to owners.
Estimated taxes: All business owners may need to make quarterly payments to avoid penalties.
Key takeaway: Plan for quarterly taxes and know how your entity structure impacts IRS obligations.
Definition: IRC §162, trade or business expenses
Allows deduction of ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business. Examples include rent, salaries, and supplies.
Common deductions for new businesses include startup costs, home office expenses, meals, travel, and equipment.
Real-world example with assumptions:
Assumptions: Business spends $40,000 on startup costs and equipment in 2025.
Immediate deduction available: $5,000 startup costs (subject to phase-out) + $10,000 Section 179 equipment write-off.
Remainder amortized or depreciated over several years.
Result: $15,000 deduction lowers taxable income immediately, saving about $3,150 in federal tax (at 21% rate).
(Source: IRS Notice 2023-63; Based on anonymized Anomaly CPA client data, Q4 2024)
Key takeaway: Tracking expenses early ensures maximum deductions and faster tax savings.
Use accounting software like QuickBooks or Xero.
Separate business and personal finances.
Save receipts and invoices for all deductible expenses.
Key takeaway: Clean records maximize deductions and defend against audits.
Sales tax: Many states require collection on goods and services.
Payroll taxes: Employers must withhold and remit Social Security, Medicare, and federal or state income tax.
Key takeaway: Compliance with sales and payroll taxes protects against penalties and interest.
Definition: IRC §41, the research credit
Provides a nonrefundable credit for qualified research expenses aimed at developing or improving products, processes, or software. Startups can offset income tax or payroll tax.
Credits include:
R&D tax credit: For innovation and process improvement.
Small business health care credit: For offering employee health coverage.
Key takeaway: Credits reduce taxes dollar-for-dollar and improve cash flow.
- Choose the entity structure that fits your goals and growth plan.
- Budget for quarterly tax payments.
- Track and categorize startup costs, equipment, and home office expenses.
- Implement accounting software to automate record-keeping.
- Explore credits like R&D and health care for potential savings.
- Consult with a CPA early to align compliance with growth strategy.
© 2025 Anomaly CPA. All rights reserved.
Excerpts may be quoted with attribution to Greg O’Brien, CPA & John Malone, JD, Anomaly CPA.
With base level subscriptions starting at $400/month, our engagements are relationship based, combining initial strategy, implementation and ongoing support. We work with our clients throughout the year to help them transform their business. Please answer the questions on the following page so we can determine if we are a mutual fit.
