Five Tips For Starting A Business

businessplanningCongratulations! You’re thinking about starting your own business and are in the process of making initial business decisions. In your planning, understanding the tax obligation of your new venture is one key to business success. When you start a business, you need to know about income taxes, payroll taxes and much more. Here are five tips from the IRS that can help to get your business off to a good start.

1. Business Structure. An early choice you need to make is to decide on the type of structure for your business. The most common types are sole proprietor, limited liability company, partnership, S corporation, and regular C corporation. The type of business that you choose will determine which tax form that you will need to file.

2. Business Taxes. There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. In most cases, the types of tax your business pays depends on the type of business structure you set up. You may need to make estimated tax payments. If you do, you can use direct debit to make them. It’s the fast, easy and secure way to pay from your business checking or savings account.

3. Employer Identification Number (EIN). You may need to get an EIN for Federal tax purposes. Search “do you need an EIN” on IRS.gov to find out if you need this number. If you do need one, you can apply for it online.

4. Accounting Method. An accounting method is a set of rules that you use to determine when to report income and expenses. You must use a consistent method. The two that are most common are the cash and accrual methods. Under the cash method, you normally report income and deduct expenses in the year that you receive or pay them. Under the accrual method, you generally report income and deduct expenses in the year that you earn or incur them. This is true even if you get the income or pay the expense in a later year.

5. Employee Health Care. The Small Business Health Care Tax Credit helps small businesses and tax-exempt organizations pay for health care coverage they offer their employees. You’re eligible for the credit if you have fewer than 25 employees who work full-time, or a combination of full-time and part-time. The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers, such as charities. For more information on your health care responsibilities as an employer, see the Affordable Care Act for Employers page on IRS.gov.

Source: IRS Summertime Tax Tip 2016-18

If you have questions about starting, growing, or selling your small business, please contact us. As a CPA, Accredited Small Business Consultant, and Advanced Certified QuickBooks ProAdvisor, we specialize in working with small business owners just like you and provide tax, accounting, financial analysis, management, business planning, and small business advisory services. We can help you to start, manage, and grow a successful small business. For more information, call (727) 391-7373 or else visit us on the web at http://www.LStortzCPA.com.

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