Starting a business isn’t as simple as a walk in the park, even with a business plan. You may have the experience, the right connects, and even proper funding; however, your startup could still fail. But let’s say you fortunately have one of the companies that survives. Another vital key to your success is knowing your tax responsibilities. It’s not all about income tax rules, but also payroll taxes as well. Here are some tax tips from the IRS about starting strong with your business.
One of the most important decisions you’ll make early is the type of foundation that’s best suited for your business. The most common types of business structures include
- Sole Proprietor
Whichever business type you choose will have a direct relation to the tax forms you have to file.
Generally, there are four different types of business tax:
- Excise Tax
- Income Tax
- Employment Tax
- Self-Employment Tax
Whatever foundation you establish for your business will determine the type of business tax you pay. You may also have to pay an estimated tax liability. For more information about how you can pay your estimated taxes, be sure to check out the following blogs:
Paying Your Estimated Taxes
Calculating Estimated Taxes
3 Ways To Pay Your Estimated Tax
Employer Identification Number (EIN)
For federal tax purposes, you might have to get an employer identification number (EIN). You can go to IRS.gov to find out if your business is required to have one. And if so, you can electronically apply for it for free.
Another major decision to make about your business is which set of rules to use when reporting your income and expenses. These rules are known as an accounting method, and you have to be consistent with the method you choose. The most typical methods are
- Cash – Reporting income you received and deducting expenses you paid, usually with cash, within the year.
- Accrual – Reporting income you earn and deducting expenses you incur, usually with some form of credit, within the year. This applies even if you receive the income or pay the expenses after your tax year.
Health Care for Employees
There is credit available that assists small businesses and tax-exempt organizations in paying for health care coverage offered to employees known as the Small Business Health Care Tax Credit. You can qualify if you have a maximum of 25 employees working full-time, or a combination of both full and part-time.
The max credit available for small businesses is 50 percent of premiums paid and 35 percent for tax-exempt organizations. You can learn more about employer shared provisions by visiting the IRS website.
Of course, the most important thing you can do to keep your business afloat is to stay compliant with the rules and regulations established by the IRS. You can stay on top of your tax responsibilities by e-filing with ExpressTaxFilings. We work closely with the IRS to provide you a seamless, quick, and user-friendly way to e-file your W-2 and 1099 forms.
For any questions or assistance with e-filing our e-filing services, contact our support team of live professionals at our office located in Rock Hill, South Carolina. You can call (704) 839-2270 Monday through Friday from 9 a.m. to 6 p.m. EST, email at firstname.lastname@example.org, or live chat with us at www.expresstaxfilings.com.