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Five Tax Facts for Start-Ups

July 28, 2014

Five Tax Facts for Start-Ups

Zach Naal


  1. Determine Your Federal Tax Obligations:

When you start a business, you must decide what form of business entity to establish. The type of business form (sole proprietorship, partnership, LLC) determines which income tax return form you have to file. i.e: Income Tax Self-Employment Tax, Excise Taxes, Federal Taxes and more.

Like federal taxes, your state tax requirement depends on the legal structure of your business. For example, if your business is an LLC, the LLC is taxed separately from the owners of the business, while sole proprietors report their personal and business income taxes using the same form used to report their business taxes.

2.     Determine When the Tax Year Starts:

When starting a business you can choose the Calendar year or Fiscal year:

-Calendar year – A calendar tax year is 12 consecutive months beginning January 1 and ending December 31.

-Fiscal year – A fiscal tax year is 12 consecutive months ending on the last day of any month except December. A 52- to 53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month

You adopt a tax year by filing your first income tax return using that tax year.

3.     Determine Your State Tax Obligations

Each state and locality has its own tax laws. Having knowledge of your state tax requirement can help you avoid problems and your business save money. The most common types of tax requirements for small business are income taxes and employment taxes.

4.     Obtain Your Federal Business Tax ID

An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. Generally, businesses need an EIN. You may apply for an EIN in various ways, and now you may apply online.

You must check with your state to determine if you need a state number or charter.


  1. Determine tax deductions (keep your receipts) :

According to the AICPA a lot of small-business executives don’t bother to claim some easy deductions. Most common on that list: entertainment, travel, meals, home office and health insurance.

However “travel miles, meals and entertainment deductions require that you maintain a diary with daily entries that tie into receipts and other records,” the group says.

For more information about how CFO Rick can help you with your small business, contact us here or call 415.821.0895.

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