What New Business Owners Need To Know

As a new business owner, you need to know your federal tax responsibilities. Table 1, below, can help you learn what those responsibilities are. Ask yourself each question listed in the table, then see the related discussion to find the answer.

What New Business Owners Need To Know About Federal Taxes

What Must I Know?	Where To Find the Answer
Which form of business will I use?	(Note: This table is intended to help you, as a new business owner, learn what you need to know about your federal tax responsibilities. To use it, ask yourself each question in the left column, then see the related discussion on the page shown in the right column.) See Forms of Business on page 3.
Will I need an employer identification number (EIN)?	See Identification Numbers on page 3.
Do I have to start my tax year in January, or may I start it in any other month?	See Tax Year on page 4.
What method can I use to account for my income and expenses?	See Accounting Method on page 5.
What kinds of federal taxes will I have to pay? How should I pay my taxes?	See Business Taxes on page 5.
What must I do if I have employees?	See Employment Taxes on page 6.
Which forms must I file?	See Table 2 on page 6 and Information Returns on page 8.
Are there penalties if I do not pay my taxes or file my returns?	See Penalties on page 9.
What business expenses can I deduct on my federal income tax return?	See Business Expenses on page 9.
What records must I keep? How long must I keep them?	See Recordkeeping on page 11.

This publication provides basic federal tax information for people who are starting a business. It also provides information on keeping records and illustrates a recordkeeping system.

In addition to knowing about federal taxes, you need to make some basic business decisions. Ask yourself:

·         What are my financial resources?

·         What products and services will I sell?

·         How will I market my products and services?

·         How will I develop a strategic business plan?

·         How will I manage my business on a day-to-day basis?

·         How will I recruit employees?

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