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Starting a small business? IRS website can help

September 14, 2017

 

Starting a new small business may seem like a daunting task, but there are a few basic first steps that will make the rest of the process smoother. Of course, choosing a name, a location, and an innovative service or product is up to you, but when it comes to taxes, the IRS website is ready to help.

 

If your short-term plans include starting a small business, be sure to visit IRS.gov. The IRS website has answers to questions on payroll and income taxes, credits and deductions plus more.

 

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.

 

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.

 

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.

 

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.