STARTING YOUR OWN BUSINESS?
Starting a business? How to save on taxes!
Starting a new business can be exciting. It can also be confusing. If you expect to have employees, there are a variety of federal and state forms and applications that will need to be completed to get your business up and running. That's where an Enrolled Agent can help.
Employer Identification Number (EIN)
Securing an Employer Identification Number (also known as a Federal Tax Identification Number) is the first thing that needs to be done, since many other forms require it. EINs are issued by the IRS to employers, sole proprietors, corporations, partnerships, non-profit associations, trusts, estates, government agencies, certain individuals, and other business entities for tax filing and reporting purposes. The fastest way to apply for an EIN is online through the IRS website or by telephone.
State Withholding, Unemployment, and Sales Tax
Once you have your EIN, you need to fill out forms to establish an account with the State for payroll tax withholding, Unemployment Insurance Registration, and sales tax collections (if applicable).
Payroll Record Keeping
Payroll reporting and record keeping can be very time-consuming and costly, especially if it isn't handled correctly. Also, keep in mind, that almost all employers are required to transmit federal payroll tax deposits electronically. Personnel files should be kept for each employee and include an employee's employment application as well as the following:
- Form W-4 is completed by the employee and used to calculate their federal income tax withholding. This form also includes necessary information such as address and social security number.
- Form I-9 must be completed by you, the employer, to verify that employees are legally permitted to work in the U.S.
Now, one point that should be looked into here is to how to handle the paperwork for your business. You might be a great salesman, entrepreneur, consultant etc. If you are starting your own business, we assume you have the ability to create customers and income. If not, no matter how perfect your books or your tax forms are, you are going to fail. You need a flow of clients and income - no amount of bookkeeping and tax expertise will make up for that.
It is also true that many brilliant entrepreneurs with great sales skill and creative ability and leadership skill have failed because of the lack of bookkeeping and tax expertise. They had a great product starting to sell and an enthusiastic and supportive staff. And then a major client they had extended credit to did not pay his bill. And the up-till-now supportive and enthusiastic staff did not get paid. Then the bank would not extend a loan as their were no books that showed the company was worthy of credit.
So be realistic about your strengths and weakness. If you can build a dynamic company, but need help on the paperwork, admit it. Or contrariwise, if you are expert on the paperwork but are relying on someone else to generate the business, admit that as well. You can always learn more and you can be skilled in many things. You should. But if you are still learning, your company may need skilled help now.
One solution may be to hire a bookkeeper and let this person handle the books, payroll, filings etc. But you have to ask yourself this question: Do you have enough work to require a full-time person? Also, if you know how to do the work, and are simply too busy, that is one situation. But if you do not have that expertise, then the person you hire will have to be a pro able to work well unsupervised, or you will have to have a pro to supervise them.
If you need skilled assistance now, but are not big enough to require a full time bookkeeper, consider using a bookkeeping service. Our skilled bookkeeper can either do your books and payroll , or can oversee your new bookkeeper and make sure she is set up well and operating. We can ensure that your company gets properly set up in its bookkeeping. Even more important, we can make sure you do not get dragged into the bookkeeping if you are the one generating the income or making the production happen. Income and the delivery of a valuable product or service are even more important than bookkeeping, payroll and taxes. But all are needed for success.
Also now is good time to work out how to structure your activity. Sole Proprietorship, Partnership, LLC, C Corporation, S Corporation. You have heard the words and may even know what they mean. But if you are not an expert, you may not know the tax and other advantages and disadvantages of each. Many start-up owners spend tens of thousands of dollars in unnecessary taxes in the first years simply because they did not take care of this one point or get expert help.
You are welcome to contact Torchlight Tax and Financial Solutions for a free consultation. We will be happy to show you what we can do to set up your bookkeeping and payroll so you can pay attention to making your company sell and deliver your services and goods so you are solvent and viable. And we can also set you up to save tax dollars. Even a one man company may save $10,000 or more in the first year by setting themselves up as the proper business entity. Next April 15th is too late to set yourself up to save for this year.
What to do?
If you have any questions or need any tax assistance contact Torchlight Tax for a free consultation. One of our Enrolled Agents (top federally credentialed tax expert) will assist you. Email us or call our Toll Free Number (877) 758 7797.
SAVE MONEY BY DOING YOUR TAXES THE RIGHT WAY!