San Jose... the land of garage millionaires. In few places does the American entrepreneurial spirit burn as bright as here in the Silicon Valley.

However, those that think big don’t always take care of little tax preparation details. Often my fellow citizens of San Jose forget to approach their accounting proactively, and end up having to pay for it.

Small businesses especially are vulnerable to this way of thinking: They are often so elated from prospering past their initial year, that they make costly tax mistakes. Even without audits or penalties, lack of attention can easily cost you twenty percent of your earnings... just to make things right.

“I use QuickBooks and Save all of my Receipts, so I’ll be Fine.”

Does this sound like you? If I had a dime for every time someone told me this, I would retire from doing tax preparation in San Jose. The QuickBooks Software from Intuit is incredibly helpful, but is not much good if you don’t know how to properly use it.

Currently San Jose faces more pressure than ever to start a small business. That’s because regular jobs aren’t panning out and Bay Area folks have a remarkable tendency to turn their hobbies into careers.

But regardless of what you do, your taxes should be a huge concern from day one. Taxes even determine your very corporate identity- Whether you incorporate as an LLC, S-Corp, or C-Corp. And any long-term plans to raise capital, finance, or sell shares should be rooted in tax considerations.

If you are one of those citizens of San Jose that earns money under the table, without any thought of tax preparation, you might want to consider going legal. The income will help you when you need to qualify for a loan, such as a mortgage.

Federal taxes are not your only concern. The State of California will impose a levy as well, which will be collected by local jurisdictions. And if you are in retail, you must serve as the state’s unwilling agent in the collection of sales tax.

The lesson is this: Don’t be one of those businesses that rue not seeing a professional around tax time. Turbo Tax or QuickBooks won’t do the trick anymore. Consider approaching your tax issues proactively and in a timely fashion.