Tax Tips for Starting a New Business

November 24, 2021   |   Blog

a man sitting at a desk with the words tax tips for starting a new business below him

Starting a new business is no easy task — there are so many factors for new startup companies to consider. Between planning what type of entity structure you should be to ownership configuration, proper federal and state set-up and payroll, it’s difficult to know where to start and what you need. If it’s your first time building a business from the ground up, you might not know how to begin, especially when choosing a business structure and understanding the according tax brackets. So, what needs to be done before you can create a business? Where should you start? These are all important questions that you should be thinking of. Marshall Jones is a step ahead: here are the eight simple tax steps for starting a new business.

1. Choose a Name

Step one in a tax checklist for starting a business is exciting: you must first decide on a name for your new business. Doing this will not only make the business legitimate but will allow you to proceed with the legal steps to officially become a business. While this may seem like an easy task, it’s often more complicated than entrepreneurs expect. Make sure to carefully think about your business name, as it will soon be plastered everywhere and won’t be easy to change in the future.

2. Decide on a Business Structure

Next, you’ll need to discuss the business structure with your accountant. This may also seem like a simple decision, but it will financially determine the majority of your business decisions going forward. This step requires a great deal of time and planning, so it is imperative to discuss it thoroughly with a certified public accountant (CPA). Do you know the difference between a corporation, partnership, or limited liability company (LLC)? If not, your accounting expert can answer all of your questions and help you decide the most appropriate business structure to establish.

3. Register Your Business

The next step in the business creation process is checking with the Department of State to determine if your business’s name is available. You can do this simply by checking the Secretary of State’s website. This is also typically filed on your individual state’s website. Once you have an approved name, you can successfully register your new business.

4. Request a Federal ID 

After you get approval from the State Department to form the business, you then need to enter the federal tax registry. You can simply go to the International Revenue Service (IRS) website, where you’ll request a Federal ID Number, commonly known as an EIN, for the new business. This nine-digit number is a tax identification number and is used for your business similar to how a social security number is used for individuals. After requesting the number, you should receive it almost immediately. 

5. Discuss Salaries

Once registered with your EIN, you need to discuss salaries with your accountant. You should come up with appropriate salaries for the business’s owners — if it’s more than just you. Your accountant will help you calculate a business owner’s salary based on the type of business, its income, your typical work week, and other factors. Once a salary is calculated, your accounting expert can then estimate what your future tax payments will be.

6. Set Up Bank Accounts

You should then set up a separate bank account for your business. If you own more than one business, each one must have its own bank account and, if necessary, credit cards. It is also extremely important for new business owners to remember that business income and expenses cannot be commingled with personal funds. Failure to do this will result in unpleasant tax consequences and can also include legal repercussions. Many banks offer special bank accounts specifically for small businesses — do some research or ask your accountant for recommendations.

7. Apply for a Business License

In addition, each business you own has to have its own business license. After your financial accounts are set up, you can apply for one. A business license is a permit issued by the government that authorizes someone to conduct business within a geographical jurisdiction. These are usually issued on a local basis, except in special circumstances, like when your business operates in a dangerous industry. In the state of Georgia, many businesses can easily apply for their license online. The business license process, from application to reception, typically takes several weeks. Once you receive your license, your business is official and can begin operations. 

8. Stay in Touch

Finally, your accountant at Marshall Jones will always have your back. Throughout the year, our tax team will stay in touch with the business owner to answer any questions and ensure proper taxes are computed and paid. We’ll make sure your business continues to comply with important financial laws. Our goal is to ensure that business owners are always well informed and that there are no surprises. With our customized approach to helping you complete a checklist for starting a business, we will perform as many of these steps as the business owner sees fit. We are also happy to walk our clients through any steps they would like to perform for themselves. 

At Marshall Jones, we are committed to providing quality tax advisory services for corporations and individuals by customizing our services to fit your specific needs. You’ll work one-on-one with an expert who knows exactly what you and your business require — so you don’t have to do the heavy lifting. Your consultant will create a personalized plan for your business that checks all of the boxes. You’re busy enough building your own business — why spend time trying to figure out how to file taxes? Let our tax experts at Marshall Jones help you — so you can focus on what matters most. Contact us today to learn more about us and how we can make your business dreams a reality.

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