If the new year for you means starting a business, there are several things you’ll need to do upfront to set yourself up for success. To help you begin, here’s a checklist for starting a small business
Get your Employee Identification Number (EIN)
– First, you’ll need to get an EIN to identify your business when filing your Denver tax return and to include in other documentation. The exception is if you’re a sole proprietor or have an LLC (see below), in which case you can just use your social security number. You can apply for an EIN online
Figure out your business structure
– Next, determine the type of business you will have. There are a number of ways you can set up your business:
– Sole owner of an unincorporated business.
– A relationship with another person to carry out a trade or business, with both of you contributing money, property, and labor, and expecting to share any profits or losses of the business.
Limited Liability Company (LLC)
– A private company with the pass-through taxation of a sole proprietorship or partnership, but with limited liability.
– A corporation where you and your shareholders (if applicable) exchange money and/or property for the corporation’s capital stock.
– A corporation that passes corporate income, losses, deductions, and credits to you and your shareholders (if applicable) for federal tax purposes.
Each business structure
has its own tax implications and liabilities which are important to learn about.
Choose a tax year
– A tax year is basically the annual period of reporting income and expenses. You can choose your tax year to follow the calendar year of 12 consecutive months starting January 1 and ending December 31, or a fiscal year of 12 consecutive months that ends on the last day of any month except December.
Have employees fill out their forms
– If your business has employees, they will each need to fill out a Form I-9 to verify their identity and authorization to be hired as an employee in the U.S., along with a Form W-4 for tax withholding purposes.
Mark your calendar for quarterly tax payments
– Estimated taxes for businesses are due four times a year. Depending upon when you start your business, you may want to mark your calendar with this year’s tax due dates: April 18, June 15, and September 15, along with January 15, 2017. Thorough record-keeping and sticking to the due dates will help you avoid any penalties.
And remember that it never hurts to speak with an accountant or tax professional. They can be instrumental in helping you decipher what kind of business taxes you’ll need to pay dependent on the type of business you set up and Colorado’s specific tax laws, as well as which of your business expenses are tax deductible.
Bloch, Rothman & Associates have been helping businesses with their Denver business tax preparation
and planning for decades. Fill out the form online for a free initial consultation, or call us at 303-321-7160.