Starting a new business can be an overwhelming task. Being aware of all the filing and tax requirements is a good place to start because the decisions you make now will affect your income and business operations for years to come.
When starting a new business it’s essential to register with the proper authorities. The first step is determining what form the business will take. Formation of a business is important from a liability and taxation issue and will determine how you pay your taxes. As a corporation, the owner will be on payroll and will generally receive a W2 while a single-member LLC, proprietor, or partnership will generally take a draw and will be personally responsible to send in their taxes quarterly.
New businesses must get registered with the state. Pennsylvania, through its E-Tides online system, requires registration which will allow the new business owner to file Sales Tax, Unemployment Tax, and Withholding Tax online. The Federal Government also has an online filing for tax deposits via their EFTPS system. The Federal Government allows businesses to make payroll tax deposits and it also allows for tax deposits for payment of corporate income tax. The city also requires registration for City Wage Tax and BIRT/NPT income taxes.
The final requirement for each entity is the filing of its income tax return at year’s end. The type of income tax return is determined by the type of entity that was formed. Corporations file form 1120 or 1120S. Partnerships file form 1065. Proprietorships and single-member LLCs file a Schedule C with their personal income tax return.
New owners should consider sitting down with a qualified Certified Public Accountant who has knowledge of all the tax filings and registrations. It is important not to get behind so as not to get audited or penalized for not filing a required tax.