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What People Need to Know When Starting a Business

What People Need to Know When Starting a Business

by Internal Revenue Service

Image by Gerd Altmann from Pixabay

The IRS knows that understanding and meeting tax obligations is vital to the success of all businesses, especially a new one. IRS.gov has the resources and information to help people through the process of starting a new business.

Here are some tips for new entrepreneurs.

Choose a business structure

The form of business determines which income tax return a business taxpayer needs to file. The most common business structures are:

Choose a tax year

tax year is an annual accounting period for keeping records and reporting income and expenses. A new business owner must choose either:

Apply for an Employer Identification Number (EIN)

An EIN is also called a Federal Tax Identification Number. It’s used to identify a business. Most businesses need one of these numbers even if they don’t have employees.

It’s important for a business with an EIN to keep the business mailing address, location and responsible party up to date. IRS regulations require EIN holders to report changes in the responsible party within 60 days. They do this by completing Form 8822-B, Change of Address or Responsible Party and mailing it to the address on the form.

Have all employees complete these forms

Pay business taxes

The form of business determines what taxes must be paid and how to pay them.

Visit the state website

Prospective business owners should visit their state’s website for info about state requirements.