When you start a business, there are many things that you have to consider from location, insurance, workers, taxes etc… Taxes is one area that may get people very confused. As most people have somebody else do their personal income taxes even for simple 1040EZ filings. However with a business, things can get even more complicated. There are many more items to consider when fling business taxes.
First and foremost is that the business type you choose will dictate how your business will be taxed. Taxes will be different when you’re a sole proprietor, partnerships, S and C corporation, and LLC’s. Choosing the right business entity will come to how best to pay the least amount of tax. Consulting a tax professional will help you to make that determination.
The IRS does provide a great website for questions and answers regarding taxes. Their business tax and self employment tax website is full of very useful information about business and taxes. The IRS also has a separate section about how taxes can be filed for the different types of business entities. Use the following links to get you to the right location for the business types you need.
• Sole Proprietorships
• Partnerships
• LLC
• S Corporation
• C Corporation
Once you know what business type you will be filing, you will most likely need a Federal Employer Identification Number or FEIN. The FEIN is like a Social Security Number for a business. It is very easy to obtain a new FEIN number. You have two options, you can contact the IRS at 800-829-4933 or you can go online to obtain a FEIN here.
One thing is certain is death and taxes. Your company will have to pay tax, however consulting with a tax professional may get you on the right track to tackling one of the biggest challenges in starting a small business.