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Four Things to Know about Taxes and Starting a Business
New business owners have tax-related things to do before launching their companies. Spencer Hostetter, CPA has resources to help. Here are some items to consider before scheduling a ribbon-cutting event.
Choose a business structure
When starting a business, an owner must decide what type of entity it will be. This type determines which tax forms a business needs to file. Owners can learn about business structures at IRS.gov. The most common forms of businesses are:
The type of business someone operates determines what taxes they need to pay and how to pay them. There are the five general types of business taxes.
Businesses typically figure their taxable income based on a tax year of 12 consecutive months. A tax year is an annual accounting period for keeping records and reporting income and expenses. The options are:
Being organized helps businesses owners be prepared for other tasks. Good recordkeeping helps a business monitor progress. It also helps prepare financial statements and tax returns. See IRS.gov for recordkeeping tips.
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