Three Things to Know before Starting a Business
Starting a new business is an exciting but busy time with so much to be done and so little time to do it in. And, if you expect to have employees, there are a variety of federal and state forms and applications that will need to be completed to get your business up and running. That’s where a tax professional can help.
Employer Identification Number (EIN)
Securing an Employer Identification Number (also known as a federal Tax Identification Number) is the first thing that needs to be done since many other forms require it. EINs are issued by the IRS to employers, sole proprietors, corporations, partnerships, nonprofit associations, trusts, estates, government agencies, certain individuals, and other business entities for tax filing and reporting purposes.
The fastest way to apply for an EIN is online through the IRS website. Applying by fax or mail generally takes one to two weeks.
State Withholding, Unemployment and Sales Tax
Once you have your EIN, you need to fill out forms to establish an account with the state for payroll tax withholding, unemployment insurance registration, and sales tax collections (if applicable). You also may need to carry workmen’s compensation and disability insurance policies, depending upon the state in which your business is situated.
Payroll Record Keeping
Payroll reporting and record keeping can be very time-consuming and costly, especially if it isn’t handled correctly. Also, keep in mind, that almost all employers are required to transmit federal payroll tax deposits electronically. Personnel files should be kept for each employee and include an employee’s employment application as well as the following:
Form W-4 is completed by the employee and used to calculate their federal income tax withholding. This form also includes necessary information such as address and social security number.
Form I-9 must be completed by both the employee and you, the employer, to verify that employees are legally permitted to work in the U.S.
If you need help setting up or completing any tax-related paperwork needed for your business, don’t hesitate to call us.