When you start a business, a key to your success is to know your tax obligations. You may not only need to know about income tax rules but also about payroll tax rules. Here are four tax tips that can help you get your business off to a good start.
1. Structure. An early choice you need to make is to decide on the type of structure for your business. The most common types are sole proprietor, partnership and corporation. The type of business you choose will determine which tax forms you will file.
2. Taxes. There are four general types of business taxes. They are 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. You may need to make estimated tax payments. If you do, use IRS Direct Pay to pay them. It's a fast, easy and secure way to pay from your checking or savings account. Don't hesitate to call if you need assistance or have any questions about IRS Direct Pay.
3. Employer Identification Number. You may need to get an EIN for federal tax purposes. Call the office to find out if you need this number. If you do, help is available to make sure this process goes smoothly.
4. 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 that are most common are 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.
Give the office a call if you're thinking about starting a business but don't know where--or how--to start.
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