Simply getting a business incorporated is quite easy. Tax filing for a business is much more complicated. In fact, it can be quite intimidating for a lot of new business owners. The Gov Doc Filing website contains a lot of advice for beginners about the official forms a business must file.
Letting the IRS Know That Your Business Exists
The first step to forming a new business is filling out an application form for an EIN. An EIN (Employer Identification Number) is the ID number you use for your business for tax purposes. It fulfills the same function as a social security number, except for a business. You need an EIN in order to file a tax return for your business. You also need to give the bank your EIN when you open a bank account, just like you would with an SSN.
Understand the Different Tax Forms That Businesses Need to File
As an individual, you only need to file one tax form a year. You don’t have to think about the income taxes that come out of your paycheck each pay period. Those taxes are the responsibility of the employer, the business. As a business owner, you are responsible for paying income taxes on your employees. You must also make sure that you are contributing the right amount from their income toward social security and Medicare.
Besides its annual tax return, a business is often required to file certain forms with the IRS on a quarterly basis. Some business software applications can prepare these quarterly reports automatically.
As a new business owner, you should also be careful when choosing your business entity type. An LLC is a popular choice because of its flexibility and because it avoids double taxation.
Start your new business off right by applying for an EIN online today.