One of our favorite clients to work with is the brand new business owner. This is because they have a fresh slate to work with and it’s the perfect time to plan. Planning in the initial business stages can avoid costly headaches down the road!
One of the biggest headaches that new business owners have is dealing with or changing a business entity because they did not get the proper guidance at the start. The IRS published some great tax tips (listed below) for new business owners as it relates to their obligations. Knowing is only half the battle; you also need to make sure you know how
to calculate these taxes correctly so if you have any doubts, make sure to seek out a tax professional for guidance.
Here are five IRS tax tips that can help you get your business off to a good start.
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.
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 the fast, easy and secure way to pay from your checking or savings account.
Employer Identification Number.
You may need to get an EIN for federal tax purposes. Search “do you need an EIN” on IRS.gov to find out if you need this number. If you do need one, you can apply for it online.
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.
Employee Health Care.
The Small Business Health Care Tax Credit helps small businesses and tax-exempt
organizations pay for health care coverage they offer their employees. A small employer is eligible for the credit if it has fewer than 25 employees who work full-time, or a combination of full-time and part-time. The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers, such as charities.
The employer shared responsibility provisions of the Affordable Care Act affect employers employing at least a certain number of employees (generally 50 full-time
employees or a combination of full-time and part-time employees). These employers’ are called applicable large employers. ALEs must either offer minimum essential coverage that is “affordable” and that provides “minimum value” to their full-time employees (and their dependents), or potentially make an employer shared responsibility payment to the IRS. The vast majority of employers will fall below the ALE threshold number of employees and, therefore, will not be subject to the employer shared responsibility provisions.
Employers also have information reporting responsibilities regarding minimum essential coverage they offer or provide to their fulltime employees. Employers must send reports
to employees and to the IRS on new forms the IRS created for this purpose.
If you have questions about how to calculate your estimated tax payments or when
employment taxes are required, please call us and we will be ready to help!
Our office phone number is (407) 922-0918 or you may email to firstname.lastname@example.org ! Remember, our mission is YOUR business – from start-up to success!