Are you considering starting your business in the United States? Here are a few things that you should do.
As a new entrepreneur, it is important that you be aware of your legal, tax and social obligations in the United States of America. The learning process may be challenging but the Internal Revenue Service (IRS) has resources to help you.
The professionals at Aimlon CPA P.C. may also support you in that new journey.
CHOOSE A BUSINESS STRUCTURE
The legal form of entity that you choose determine how you and the business must file your income tax return. The followings are the typical business structures:
- Sole proprietorship: you are an individual owner, and your business is not incorporated. There’s no distinction between you and your business.
- Partnership: you must be at least two owners to form a Partnership. Like a sole proprietorship, there is no distinction between you and your Partnership.
- Corporation: you create separate entity owned by shareholders. The company may file its own tax return (C Corporation) or the shareholders may report their share of the company’s profit or loss (S Corporation).
- Limited Liability Company (LLC): it is formed under a state law, and it offers liability protection under certain circumstances.
CHOOSE A TAX YEAR
A tax year is an accounting period at the end of which you update your records and report the revenue that you earned during that period and the expenses that you incurred or paid. You may choose to report your revenue and expenses on a calendar year basis or on a fiscal year basis.
- Calendar year: this is twelve consecutive months beginning on January 1 and ending on December 31.
- Fiscal year: this is twelve consecutive months ending on the last day of any month except December.
APPLY FOR A FEDERAL EMPLOYER IDENTIFICATION NUMBER
We suggest you apply for a Federal tax ID. It is used to identify your business. It is also known as employer identification number (EIN).
The IRS also recommends that you keep your business information current: business mailing address, location, responsible party, etc.
EMPLOYEE FILE
If you hire an employee, you should consider have him or her complete and sign the Forms I-9 Employment Eligibility Verification and w-4 Employee’s withholding allowance certificate.
Form I-9 helps you collect the necessary information to ensure that your employee is authorized to work in the United States. Form w-4 provide information on the amount of Federal income tax that you should withhold from the employee’s paycheck.
How we may help: Aimlon CPA P.C. professionals can provide you with guidance every step of the way: choice of entity, the tax year, payroll set up, payroll processing, payroll tax return filing.
The United States Census Bureau noted that 421 503 businesses were created in August 2022. A breakdown of the business creations by geographic area is as follows:
• South: 195 277
• West: 95 092
• Midwest: 69 143
• Northeast: 61 991
The following industries account for most of the business creations:
• Retail trade: 67 180
• Professional services: 53 889
• Construction: 41 950.