Setting up your business is an exciting time, but it’s essential to make sure you complete the task correctly. You’ll need to follow a few steps to ensure your business is set up correctly with the IRS and your state revenue office.
Keep in mind that every business will have unique steps. In addition, different industries will have more or fewer steps depending on what you offer and how you are structured. That said, here’s a general checklist to help your small business get set up to pay taxes correctly.
Apply for an EIN
Your employee identification number or EIN is what you’ll need to file taxes with the federal government and pay sales tax to the state. To get one of these, you’ll simply need to fill out a form and mail it to the IRS, who will then send you your EIN. Then, you can use it for a variety of purposes, such as purchasing crypto from OKX for your business. You’ll probably want to keep this number on hand as you will likely refer to it frequently.
Select a Structure
Once you have an EIN, you need to decide on the structure of your small business. This step determines the process you’ll take when filing taxes each year and whether you can file for your company separately or with your personal taxes. Some structures include sole proprietorships, partnerships, LLCs, S-corps, and C-corps. Each one has different nuances, so you’ll want to research to determine which is the best fit for you.
Apply for State Tax Exemptions
Now that your business is almost up and running, you’ll want to apply for sales tax exemptions from your state so that you can purchase items to resell. Fortunately, the Small Business Administration is a great resource to help you through this process. Generally, it will be as simple as filling out a form and sending it to your state’s revenue office.
Get W-4 or I-9 Forms for Your Employees
If you’re going to be hiring employees, you’ll need to collect I-9 or W-4 forms for them, depending on whether they are contractors or salaried. These allow you to report their pay to the government so that you can withhold some of their income taxes and send it to the government if they’re salaried, or they can pay the appropriate income taxes themselves if they are contractors.
Pay Your Taxes
After your business is in operation, it’s time to pay your business taxes. If you have a sole proprietorship or similar structure, you can pay these will your taxes, but larger businesses, such as those that have filed as corporations, will need to pay file separately, and it could end up being at a different time of the year.
Each state and industry will have a slightly different process for getting the tax portion of your business ready for operation. Therefore, you’ll want to do some research to ensure that you follow your business’s correct steps. However, these are a few general steps that most companies will need to take before they can begin operation.