24 Sep Tax Advice for New Business Owners
Starting your own business is an exciting venture, but there’s much more to it than the upfront sales and the products or services you provide. So much goes into establishing and building a business, and there are a lot of little details you have to tend to as a business owner. One of those things are your business’s taxes. If you’re setting up a new business, here is some tax-related advice to consider.
Select a Business Structure
One of the first things you’ll have to do when setting up your business is to select a business structure, also referred to as a business designation. There are several different types of business structures, including sole proprietorships, partnerships, corporations, and more. The designation you select for your business will impact how your company is taxed, so it’s important to select the right option.
Check out our blog on how your business designation impacts your taxes here for more information on selecting the right one for your company.
Choose a Tax Year
While personal taxes are almost always based on a calendar year, business taxes are a little different; depending on your business’s records and accounting methods, you may be able to choose whether to pay your taxes based on the calendar year, or adopt a fiscal year that ends in a different month than December. Please be aware that adopting a fiscal year might not be an option for you, so ask your Provo business tax professional, or review the IRS’s page on tax years, which includes some information on qualifying for a separate fiscal year.
Choosing which tax year to use for your taxable income is as simple as filing your first tax return using your desired tax year. So, if you’ve already filed a business tax return under a calendar year, then your business’s tax year has been selected. If you wish to change to a different fiscal year, you’ll need to file Form 1128 with the IRS to request approval.
Get an EIN
You’re an employer now! Even if you don’t have any employees yet, it’s important to get an Employer Identification Number (EIN) as soon as you can. This number is used to identify your business, regardless of how many employees you have.
Have Employees Complete Forms
Once you do start hiring employees, make sure they’re completing the proper paperwork. It doesn’t matter if it’s your brother, best friend, or your mom—everyone you hire should fill out both Form I-9 and Form W-4 before they start working for you.
If you’re hiring someone as an independent contractor, they will need to fill out a Form W-9 instead. You should also have a written contract with the contractor, which outlines the work they’ll be doing for you, as well as any applicable fees, deadlines, and other information pertinent to the services they provide to you.
Be sure to keep copies of all of these forms, filed away in a secure location. You should hold onto them for at least four years.
Pay Your Taxes
Finally, pay your business’s taxes. As mentioned earlier, the type of business you have will impact how your company is taxed. Additionally, your selected tax year will impact when those taxes are due. For most businesses on a calendar year, your tax deadline will be March 15th; if you extend, the extension deadline is September 15th. If you choose a different fiscal year, speak to your business tax expert to determine when your taxes are due.
Business taxes are typically a lot more complicated than personal taxes. So, if you’re starting your own business, you should plan to start working with a Provo business tax professional for your next return. Contact the experts at The Accounting Guys to schedule an appointment and go over your new business’s tax and accounting needs.