Tax Tips For Starting a New Business in 2015

If you have decided to start a new business in 2015, it is important to be knowledgeable of your federal tax responsibilities.  The following provides you with tax information regarding the type of business, the importance of keeping good records as well as using consistent accounting methods for your business.

1. From a tax standpoint, it is important to know the type of business you open in order to understand which tax forms you will need to file, such as sole proprietorship, partnership, corporation, and S corporation.
2. Your specific business determines what business taxes must be paid and how you pay them such as income tax, self-employment tax, employment tax and sales or excise tax.
3. An employer identification number (EIN) is used to identify a business entity.  Please give us a call to determine whether your business needs an EIN and we will assist in obtaining one if it does.
4. The successful operation of your new business relies on good record keeping. You may choose any record-keeping system suited to your business that clearly shows your income and expenses.  With the exception of a few cases, the law does not require any special kinds of records. However, the business you are in will affect the types of records that will have to be kept for federal tax purposes. If you need assistance or guidance in setting up your business records, please review our business accounting services or give us a call.
5. Every business taxpayer must figure taxable income on an annual accounting period called a tax year. The calendar year and the fiscal year are the most common tax years used.  Contact us for a consultation regarding your business tax needs.
6. It’s important to use a consistent accounting method, which is a set of rules for determining when to report income and expenses. The most commonly used accounting methods are the cash method and accrual method. Under the cash method, income is generally reported in the tax year it is received, and expenses are deducted in the tax year they are paid. Under an accrual method, income is generally reported in the tax year it was earned, if not yet received, and expenses are deducted in the tax year they are incurred, even though they are not yet paid.

If you are contemplating starting a business or if you already have one, please call this office if you need assistance with your accounting, bookkeeping, payroll or sales tax reporting or other federal or state compliance issues.