Information courtesy of IRS.gov
When you start a business, you need to know about income taxes, payroll taxes and much more. Review the IRS tax tips below to help get your business off to a good start:
- Business Structure. An early choice you need to make is to decide on the type of structure for your business. Common types are: sole proprietor, partnership and corporation. The type of business you choose will determine which tax forms you file.
- Business Taxes. There are four general types of business taxes: 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.
- Employer Identification Number (EIN). Determine if you 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.
- 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 most common: 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.
- 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.
Our firm can walk you through each step of setting up your business. Understanding your tax obligation is an important key to business success. Let us help you through the process.
