➡️ Understanding and complying with tax obligations is very important to the success of every business, especially a new one. Below, we leave some tips for new entrepreneurs.
🔹Choose a Business Structure
The form of business determines which tax return a business taxpayer must file. The most common structures are:
- Sole proprietorship: Unincorporated business whose owner is an individual, with no distinction between the taxpayer and his or her company.
- Partnership: Unincorporated business owned jointly by two or more persons.
- Corporation: Also known as a C Corporation. It is an independent entity owned by shareholders.
- S Corporation: A corporation that elects to pass corporate income, losses, deductions and credits through to shareholders.
- Limited Liability Company: A business structure permitted by state law.
🔹Choosing a Tax Year
A fiscal year is an annual accounting period for keeping records and reporting income and expenses. A new entrepreneur must choose one of two:
- Calendar year: 12 consecutive months beginning on January 1 and ending on December 31.
- Fiscal year: 12 consecutive months ending on the last day of any month except December.
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🔹Applying for a Tax Identification Number (EIN)
The EIN is used to identify a business, and it is important to keep them current with the mailing address, location, and the person responsible.
IRS regulations require EIN holders to report changes to the responsible party within 60 days by completing Form 8822-B, Change of Address or Responsible Party, and mailing it in.
🔹Fill Out the Employee Forms
- Form I-9, Employment Eligibility Verification U.S. Citizenship and Immigration Services.
- Form W-4, Employee’s Withholding Certificate.
🔹Paying Taxes
The form of business determines what taxes must be paid and how. Prospective owners should visit their state’s website for information on state requirements.
✅ Do you have any questions? At Wave Tax we provide you with the financial and tax advice to maximize your company’s profits.
📩 Contact us at info@wavetax.us