According to the US Census Bureau, there were 430,411 new business applications in January 2022. Starting a business sometimes comes with a learning curve that can trip you up, so it makes sense to get as many things as right as possible the first time. One important thing to address is your business tax setup.
- 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:
- Sole proprietorship: An unincorporated business owned by an individual. There’s no distinction between the taxpayer and their business.
- Partnership: An unincorporated business with ownership shared between two or more people.
- Corporation: This is also known as a C corporation. It’s a separate entity owned by shareholders.
- S Corporation: A corporation that elects to pass corporate income, losses, deductions, and credits through to the shareholders.
- Limited Liability Company: This is a business structure allowed by state statute.
- Choose a tax year. A tax year is an annual accounting period for keeping records and reporting income and expenses. A new business owner must choose either:
- Calendar year: 12 consecutive months beginning January 1 and ending December 31.
- Fiscal year: 12 consecutive months ending on the last day of any month except December.
- Acquire an employer identification number. An EIN is also called a federal tax identification number and identifies a business much like a social security identifies a person. Most businesses need an EIN.
- Have all employees complete these forms (And check for others required for your business):
- Pay business taxes. The form of business you establish determines what taxes must be paid and how to pay them. There are five general types of business tax: income, estimated, self-employment, employment, and excise and you can read in depth about each type here.
Beyond business taxes, another essential element will be your business insurance coverage. When considering the type best suited for your business, consider how coverage for things like property damage, liability, injury, loss of income, and even life and disability could impact your growth and success. It’s rarely advised to run a small business without financial protection, and that means choosing the right small business insurance to meet those risks head-on.
It can be hard for new businesses to succeed. As your trusted financial partner, we’ll help you through the process or connect you with other professionals specializing in that area. Contact us today at (603) 261-3736.
Bob has a passion for making your money work hard for you. He takes profound joy in ironing out a plan for a long and comfortable retirement, no matter what your current income or level of wealth. With a work ethic second to none, he has a zeal for transforming uncertainty into stable ways for you to protect your future and your family. He knows that the quality of your life you enjoy today can remain as rewarding—or even better—after retirement.
With a strong background in information technology, Carol is instrumental in building operational policies and strategies that keep the organization functioning smoothly. Carol’s organizational skills and her flexibility to jump from priority to priority along with her commitment to customer service makes her an essential part of the Grimard Financial team. When Carol is not working with the Grimard Financial Family, she is a very creative and accomplished photographer.