Starting a business isn’t easy, but a key to your success as an entrepreneur is to know about your federal tax obligations. Here are four basic tips that can help get your business off the ground:
- Know the best Business Structure. As you start out, choosing the best business structure is really important. Some common types include: sole proprietorship, partnership and corporations. Talking to a tax professional will help you best determine the structure which will benefit you and your business.
- Know all the Business Taxes. Generally speaking, there are four types of business taxes – income, self-employment, employment and excise tax. Which ones you pay will be greatly impacted by the business structure you choose.
- Determine if you need a Employer Identification Number. You may need an EIN for federal tax purposes as you start a new business. Call Prudent Accountants or visit IRS.gov and search “do you need an EIN”.
- Determine the correct Accounting Method. The method you choose is a set a rules that determine when you report your income and expense. Whichever you choose, make sure to keep it consistent. The two most common methods are cash and accrual. The both have their pros and cons, and talking to a reputable accountant will help you determine the best method for you.
To get all the tax basics for starting a new business and how to set up for success, visit PrudentAccountants.com or give us a call for a complimentary consultation.