It’s not easy being a small business owner this time of year. Stress levels are on the rise as owners scramble for receipts and hope they’re not leaving money on the table or opening themselves up to an audit. One of the key differences in the life of a business owner versus that of an employed person is that the business owner must keep financial records.
Two Main Benefits of Recordkeeping
There are many important reasons for keeping these detailed records of your business’ financial transactions. For one thing, this data keeps you, as the owner, constantly on top of how your business is doing financially. You’ll be able to make business steering corrections in time to head off crashes.
Another important reason for keeping detailed financial records is that they are required as proof of what you claim on your tax returns! With good records, you can take tax deductions that will leave more money in your pocket. That reward makes recordkeeping well worth the effort.
When beginning a business, you must decide what form of business entity to establish. Your form of business determines which income tax return form you have to file. The most common forms of business are the sole proprietorship, partnership, corporation, and S corporation. A Limited Liability Company (LLC) is a relatively new business structure allowed by state statute. Legal and tax considerations enter into selecting a business structure.
For additional information, refer to Choose Your Business Structure Web page
● Employment Tax Publications
● Excise Taxes
● Publication 4591, Small Business Federal Tax Responsibilities (PDF)
● IRS Publications Provided in Spanish/Español
● Publications Based on Your Specific Type of Business
● Publications Online
● Recommended Reading for Small Businesses
● Publication 1518A
● Publication 1518A (SP)
Tip #1 Decide if you’re ready to start your own business
Tip #2 Conduct market research into your business idea
Tip #3 Choose your type of business and business structure
Tip #4 Write a business plan for your new business
Tip #5 Create a marketing plan for your new business
For more information on starting a business, contact one of our experienced professionals to help get you on the right tract to the path of success.
Thinking about starting a business?
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Follow these steps to start a business