Overview -- Starting a Small Business
Starting a Business --- Here are four things to remember:
If plans include starting a business, be sure to call 586-751-6060. We have answers to questions on payroll and income taxes, credits and deductions plus more.
New business owners may find the following four tax tips helpful:
1. Business Structure. An early choice to make is to decide on the type of structure for the business. The most common types are sole proprietor, partnership and corporation. The type of business chosen will determine which tax forms to file. more than 80% of all business start-ups are now Limited liability Companies. Single Member LLCs (one owner) or Multi-Member LLCs (more than one owner) allows for tax flexibility and simplicity in annual filings and costs in most states.
2. Business 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 a business pays depends on the type of business structure set up. Taxpayers may need to make estimated tax payments. If so, you may want to use IRS Direct Pay to make them. It’s the fast, easy and secure way to pay from a checking or savings account.
3. Employer Identification Number (EIN). Generally, businesses may need to get an EIN for federal tax purposes. Generally, it is a good idea to obtain an EIN for a new business. We can obtain an EIN as part of the start-up process..
4. Accounting Method. An accounting method is a set of rules used to determine when to report income and expenses. Taxpayers must use a consistent method. The two most common are the cash and accrual methods:
a. Under the cash method, taxpayers normally report income and deduct expenses in the year that they receive or pay them.
b. Under the accrual method, taxpayers generally report income and deduct expenses in the year that they earn or incur them. This is true even if they get the income or pay the expense in a later year.
IRS YouTube Videos:
- IRS Small Business Self-Employed Tax Center – English