‹‹ RETURN TO NEWS

Tax Advisory: Information for New Business Owners

For individuals contemplating a new business venture, we developed a list of common items to be addressed. They are:

Consult an accountant and attorney regarding the type of legal structure and taxation of the business

  • Obtain legal document for business operations, for example,
    • a partnership agreement,
    • article of incorporations or
    • Limited liability corporation document
  • Register in the state in which you will operate
  • Decide how taxes will be paid on income
    • By a Corporation (C corporation)
    • Your individual return from
      • A Schedule C business (sole proprietor)
      • S Corporation (Flow Through)
      • Partnership (Flow Through)
  • Know the due dates for all tax reports and any annual registration filings
  • Ask about special tax exemptions and credits
    • Manufacturing exemption
    • Freeport exemption
    • Employment credits
    • Enterprise credits
  • Save at least 30% of your net income for taxes in a separate account

Learn about Identification numbers

  • Get an employer identification number from IRS.gov (a free service)
  • Learn the rules about state sales tax
    • File for an exemption
    • Or get a sales tax number
  • If you will be paying others for services,
    • Obtain Form W-9 from each vendor or contractor
    • If you will have employees, get a payroll service and collect Forms W-4
    • Issue Forms 1099 and/or W-2 by January 31 each year (the penalties are harsh)

Decide how to account for your business operations

  • Assistance in set up
  • Accounts and reports
  • Software
    • Cloud based
    • Manual
    • PC with separate back up
  • Billing and Collections
  • Payments to vendors
  • Records to retain for taxes
  • Who will need financials and how often

Track your business income and expenses separately by

  • Establishing a separate bank account
  • Using a separate business credit card
  • Keep receipts
  • Track your mileage

Did you know:

  • Start up and organizational costs up to $5,000 are deductible
    • Setting up a website
    • Stationery
    • Legal fees
  • You can deduct $3 per square foot up to 500 square feet for an office in home