The IRS wants to educate new small business owners about their federal tax responsibilities. “Understanding and meeting their tax filing requirements is one of the biggest challenges faced by people starting out in business,” says the head of the IRS Small Business Division.
Among the common tax issues that can trip up new business owners:
* Classification of workers. Determining whether workers are employees or independent contractors is a matter of law, not the choice of the worker or the employer.
* Federal employment tax deposits. Called trust fund taxes, these deposits must be made according to the appropriate schedule, depending on deposit amounts.
* Quarterly estimated tax payments. Business earnings are not subject to tax withholding; therefore, the owner’s income and social security tax obligations are met through quarterly estimated tax payments.
* Bookkeeping. New businesses need a good bookkeeping system to make tax filing easier and accurate.  We typically recommend QuickBooks® to our business customers, unless there is an industry specific product that may better suit the business.
* Disaster protection. Financial and tax records need to be protected to ensure business continuity in the event of a disaster.  We strongly encourage disastor recovery plans and would be happy to make recommendations to local Indianapolis providers.
* Tax scams. New business owners should be alert to the prevalence of abusive tax avoidance schemes. Falling victim to one of these schemes could result in serious tax problems.
For guidance in getting a new business off on the right tax foot, give our office a call at 317-782-3070.  Although there is an expense to setting things up correctly for your business, you will likely avoid spending more money later if there is clean up work to do and problems to be fixed.