How to Start a Business & Pay Taxes
While starting a business can be a rewarding endeavor, it isn't without its challenges. Both the self-employed and business owners are responsible for paying their own taxes, which can prove to be a fairly complicated process, if you don't learn your tax obligations right away. Additionally, entrepreneurs must obtain licenses and permits and enough capital to get their business afoot. Once you know the steps needed to take in order to get your business running, the process is relatively straightforward.
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Instructions
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Select a business entity, such as a limited liability company, sole proprietor, corporation or partnership. Then register your business and pay the applicable fees at your county clerk's office. Have available the names of all managing members, partners or officers, the business address, type of goods you intend to sell and contact information.
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Get your sales tax permit and any applicable permits from your state tax commission office.
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Contact your licensing department to learn what, if any, licenses you need, such as a liquor or tobacco license or contractor's license.
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Visit the IRS website at irs.gov or call (800) 829-4933 to obtain a federal tax identification number. This number acts as your business' social security number. Get enrolled in the Electronic Federal Tax Payment System, which will allow you to pay your self-employment tax (if applicable), FICA taxes and withholding tax online. Learn whether you are a monthly or semi-weekly depositor by reviewing IRS Publication 15 (2010), (Circular E), Employer's Tax Guide. If you have employees, review the information on the Federal Unemployment Tax Act, as you will be responsible for paying FUTA tax.
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Register your business with your state's Employment Security Commission, if you will have employees. Learn your tax responsibilities for paying state unemployment tax on behalf of your employees. Get enrolled in your state's Quick Tax program, which will allow you to pay state taxes, such as SUTA, withholding tax, Sales tax and Use tax online on a monthly or quarterly basis, as determined by your state.
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Pay your federal taxes when due using EFTPS. Pay your state taxes when due via your state's Quick Tax system. Each quarter, you will receive forms for SUTA (if you have employees), state and federal withholding. Fill these out as required and submit payment if you have not already paid the tax liability or if you owe more than you paid each month. For example, some state's allow you to pay SUTA tax on a quarterly basis if the tax liability is under a certain amount.
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Tips & Warnings
Visit the Small Business Administration for help on writing a business plan for your business. If you intend to apply for financing with a lender, you will need to provide a detailed business plan. You can also download Publication 15 from the IRS website, irs.gov, which is an employer's tax guide.
