Tax Tips for New Businesses

Thinking about Starting A New Business?

Here a few quick tax tips to help you along the way.

First, you must decide what type of business entity you are going to establish. This will determine how you are taxed by the IRS, State, and local (Including but not limited to Income tax, self-employment tax, employment or payroll taxes, and excise tax). The most common types of businesses are LLCs, sole proprietorship's, partnerships, corporations and S corporations.

Make sure you get An Employer Identification Number (EIN). Many people who use simple online sites to get Incorporated often neglect to get an EIN#. This is needed to open an bank account as well as report taxes to the various government agencies.

Keep Good records. If you can, purchase a computer based bookkeeping system such as QuickBooks. A good set of quickbooks is a valuable asset to have in case of a government audit as well as a client billing dispute. Also, there is a saying " Good Data In, Good Data out", so either learn quickbooks from a Quickbooks Proadvisor or hire a local bookkeeper to do the data entry for you.

Plan ahead. Many taxpayers fail to realize until the end of the year that they may owe tax. This occurs primarily because the taxpayer fails to notify his or her accountant of the activity inside the business until year-end. Ask your accountant to visit you at least quarterly to assure that your estimated tax payments are sufficient to cover your projected tax bill.