When starting a business, all small business owners have many tasks to complete. It can be overwhelming to the entrepreneur in the Greater Philadelphia area who is an expert in the goods and services he/she provides but may not have ever run a business before. With a little planning and elbow grease you can be off and running working both on and in your business.
- Business Plan. Making a good business plan is important to not only get you started in the right direction but to direct your business.
- 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.
- 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.
- Employer Identification Number (EIN). Generally, businesses may need to get an EIN for federal tax purposes. Search “EIN” on IRS.gov to find out if the number is necessary. If needed, it’s easy to apply for it online.
- 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. Consulting an accountant is important here.The two most common are the cash and accrual methods:
- Under the cash method, taxpayers normally report income and deduct expenses in the year that they receive or pay them.
- 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.
- Establish Good Record Keeping Practices. This will make your life easier when dealing with the IRS (also state and local governments) , your employees, your customers, banks and even your accountants.n
It is always a good idea to pay for wise counsel when starting a business. This includes visiting with an attorney who specializes in business formation. Additionally, before you start to make a significant amount of money it is a good idea to sit with an accountant who can walk you through your responsibilities in establishing best practices for tracking the finances of your business.