IRS Tax Tip 2020-124, September 23, 2020
Understanding the tax responsibilities that come with starting a business venture can save taxpayers money and help set them up for success. IRS.gov has the resources and answers to help people through the process of starting a new business.
The form of business determines which income tax return a business taxpayer needs to file. The most common business structures are:
A tax year is an annual accounting period for keeping records and reporting income and expenses. A new business owner must choose either:
An EIN is also called a federal tax identification number. It’s used to identify a business. Most businesses need one of these numbers. It’s important for a business with an EIN to keep the business mailing address, location and responsible party up to date. IRS regulations require EIN holders to report changes in the responsible party within 60 days. They do this by completing Form 8822-B, Change of Address or Responsible Party and mailing it to the address on the form.
The form of business determines what taxes must be paid and how to pay them.
Prospective business owners should visit their state’s website for info about state requirements