Four Things to Know about Taxes and Starting a Business

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Four Things to Know about Taxes and Starting a
Business
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When starting a new business, owners have many
tax related things to do. Here are few things to
know before launching your company.
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1. Choose A Business Structure From Sole
Proprietorships to S Corporations there are many
forms of business structures. So, when starting a
business, an owner must determine what form of
business entity it will be. This decides which
tax forms a business needs to file.   2.
Determine Business Tax Responsibilities  What
taxes you need to pay and how to pay depends upon
the type of business you operates. There are the
five general types of business taxes
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• Income Tax Except partnerships all business
  entity must file an annual income tax return.
  They must pay income tax as they earn or receive
  income during the year.
• Self-Employment Tax It refers to a Social
  Security and Medicare tax. It applies primarily
  to individuals who work for themselves.
• Employment Taxes - These are taxes an employer
  pays or sends to the IRS for its employees. These
  include unemployment tax, income tax withholding,
  Social Security, and Medicare taxes.

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• Estimated Taxes - If the amount of income tax
  withheld from your salary or pension is not
  enough, or if you receive any income which is not
  subject to withholding tax, you may need to pay
  estimated taxes
• Excise Tax These taxes are applicable for
  business which deals with manufacture, sale or
  use of certain types of goods and products. 

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3. Choose A Tax Year Accounting Period An
accounting year or tax year is a period for
keeping records and reporting income and
expenses. A business can choose either a Calendar
year or a Fiscal year.   4. Set Up Recordkeeping
Processes Good recordkeeping helps business
owners to monitor progress and also to prepare
financial statements and tax returns.  Source
IRS
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