Starting a Business This Summer Here’s Four Tax Tips

Starting a Business This Summer Here’s Four Tax Tips


If summer plans include starting a business,
be sure to visit IRS.gov. The IRS website has answers to questions on
payroll and income taxes, credits and deductions plus more. New business owners may find the following
four IRS tax tips helpful: 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. If so, use IRS Direct Pay to make them. It’s the fast, easy and secure way to pay
from a checking or savings account. 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. 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. Get all the basics of starting a business
on IRS.gov at the Small Business and Self-Employed Tax Center. Avoid scams. The IRS does not initiate contact using social
media or text message. The first contact normally comes in the mail. Those wondering if they owe money to the IRS
can view their tax account information on IRS.gov to find out.

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