Beneficial Tax Information for New Business Ventures
In the world that we live in today, entrepreneurship and starting your own business is a positive trend that has impacted society as a whole. Individuals all over the country have found ways to provide creative products and materials to consumers through a unique and new business. Although starting a business has its various challenges, the hopeful success achieved once it has started and taken off is the ultimate reward.
To help lay a form foundation for your business to build on, we’ve provided some important tax related areas that will help your business significantly in the long run.
Defining the Structure of Your Business
When starting a business, you must first determine what form of a business entity that you would like to establish, which will also determine which income tax return form you will have to file annually. There are five forms of businesses; the most common of these are the sole proprietorship, partnership, corporation, and S corporation. A Limited Liability Company (LLC), which is a business structure that is allowed by state statute, is another business structure that can be selected.
Business Taxes
The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax. The type of business you create normally executes what type of tax the business will have to pay. An extension for filing your business taxes can be granted by filing with ExpressExtension.
Employer Identification Number (EIN)
This ten digit number, also known as a Federal Tax Identification Number, is extremely important for when it’s time to file your annual taxes and take care of anything that has a federal tax purpose attached to it.
Accounting Method
In order for a business to succeed, its finances must be consistent and in order. The accounting method for a business is a set of rules that is used to determine when to report income and expenses. The two most common accounting methods are the cash and accrual methods.
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Cash Method – Reporting Income and Deducted Expenses for the year in which the taxpayer received or paid them.
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Accrual Method – Taxpayers generally will report income and deduct expenses in the year that they earn or incur them. This method is still followed even if they receive the income or pay the expense in a later year.
So as you begin to lay the foundation for your new business, don’t forget to focus in on the little things that matter most and be sure to file your taxes each year to avoid issues with the IRS. ExpressExtension is always here to be of assistance and provide you with extension Form 7004 which grants you up to 6 months of additional time to file your taxes within minutes. For filing assistance or more information on the forms that we offer, feel free to give us a call at 803.514.5155 or email us at [email protected] for any assistance you may need.
