Compliance with IRS Return Filing Requirements no matter what business you are in. If you are just starting out in your new business contact me to get you up and running properly. Call today or visit civelazquezea.com or send email to civelazquezea@gmail.com

1. IS YOUR BUSINESS
COMPLIANT WITH IRS FILING
REQUIREMENTS
PREPARED BY: CARMEN I.
VELAZQUEZ, INTERNAL REVENUE
SERVICE, ENROLLED AGENT
NOVEMBER 30, 2013

2. WHAT YOU NEED TO
KNOW ABOUT
FEDERAL TAXES
AND YOUR NEW
BUSINESS.
We will provide an overview of what
you need to know about successfully
operating your business as well as
provide you with some resources for
additional information.
Objectives:
1. Explain the purpose of the EIN
2. Describe the basic recordkeeping
requirements for tax purposes
3. Define basic bookkeeping and
accounting methods
4. Explain the forms of business
organizations

3. THE PURPOSE OF
AN EIN
A business owner will need an EIN if
you pay wages, have a self-
employed retirement plan, operate
your business as a partnership or a
corporation, or if you are required to
file any of these tax returns:
1. Employment
2. Excise
3. Fiduciary
4. Alcohol, Tobacco and Firearms

4. THE PURPOSE OF
AN EIN
As a sole proprietor with no
employees and don’t meet any
of these requirements, you don’t
need an EIN. Unless you are
dealing with other businesses,
including banks, that require an
EIN to set up business accounts.
The IRS will give you an EIN even
if you don’t need it for IRS
Purposes

5. WHAT IS THE
PROCESS TO
OBTAIN AN EIN?
The fastest and easiest way to obtain an
EIN is online. Just go to www.IRS.gov
and type in the keyword EIN. From
there you will find more information,
including the application that you must
complete in order to get an EIN.
Although the IRS calls this a provisional
EIN, the EIN is actually the permanent
federal employer identification number
for your business. It can be cancelled if
the name and social security of the
principal officer do not match the Social
Security Admin records or if your
business already has an EIN.

6. DESCRIBE THE BASIC
RECORDKEEPING
REQUIREMENTS FOR TAX
PURPOSES
A business owner must keep the
following records in order to prove
your non-business and non-taxable
items:
1. Receipts
2. Sales slips
3. Invoices
4. Bank deposit slips
5. Cancelled checks
6. Other documents to substantiate
items of income, deductions, and
credits.
Recording these items will help you
pay only the tax you owe.

7. HOW IN-DEPTH DO
RECORDS NEED TO BE
AND HOW LONG DO
YOU KEEP THEM?
Records must support the claimed
amount, the time and the place, the
business purpose, and your business
relationship to any other person
involved. If your records are
incomplete, they may not support your
deductions. You must keep your
records as long as their contents may
be material in the administration of any
IRS law. Usually the statue of
limitations for an income tax return
expires three years after the return is
due or filed or two years from the date
the tax was paid whichever is later. To
support items of income or deduction
on your return, you must keep records
until the statute of limitations for that
return expires.

8. WHAT ARE THE
TYPES OF
BOOKKEEPING
SYSTEMS &
ACCOUNTING
METHODS
There are two types of bookkeeping
systems:
1. Single Entry
2. Double Entry
There are two types of accounting
methods:
1. Cash Method
2. Accrual Method

9. WHAT ARE THE
DIFFERENT
BUSINESS
STRUCTURES?
There are five common types of
business organizations:
1. Sole Proprietorship
2. Partnership
3. Limited Liability Company (LLC)
4. S Corporation
5. Corporation

10. WHAT IS A SOLE
PROPRIETORSHIP?
A Sole Proprietorship is the simplest
type of business organization. It is
an unincorporated business that one
person owns. The business does not
exist apart from its owner, and it is
the owner who assumes the risks of
the business to the extent of all his
or her assets, even if the owner does
not use his or her personal assets in
the business. Additionally, the ability
to finance the business, known as
capital, is limited to whatever the
owner can come up with.

11. WHAT IS A
PARTNERSHIP?
A Partnership is a relationship
between two or more persons who
join together to carry on a trade or
business. Each person contributes
money, property, labor, or skills,
and each expects to share both in
the profits or the losses of the
business. Any number of persons
may join in a partnership. The
advantages of a partnership are that
it is easy to organize, it has a
definite legal status, and it may have
a greater financial strength than a
sole proprietorship.

12. WHAT IS A
LIMITED LIABILITY
COMPANY (LLC)?
A Limited Liability Company (LLC)
are popular because owners have
limited personal liability for the
debts and actions of the LLC,
without many of the formalities of a
corporation.
For Federal Tax Purposes an LLC
may be treated as a sole
proprietorship, a partnership, or a
corporation.

13. WHAT IS AN S
CORPORATION?
An S Corporation is a small business
corporation whose shareholders elect
to have corporate income taxed like a
partnership. Partnerships are taxed
once. Corporations are taxed at the
corporate level, then, when the income
is distributed as dividends, it is taxed
again at the shareholders level.
An S Corporation does not pay tax on
income from daily operations. All
income, losses, deductions and credits
generated by an S Corp pass through
to the corporate shareholders. The
shareholders then report the items on
their personal tax returns.

14. WHAT IS A
CORPORATION?
Corporations are treated by the law as
legal entities, that is, the corporation
has a life separate from its owners and
has rights and duties of its own. The
owners of a corporation are known as
stockholders or shareholders, and it
may be worth noting, one person can
be the sole shareholder of a
corporation.
For the purposes of Federal Income
Tax, corporations include associations,
joint stock companies, and trusts as
well as partnerships that actually
operate as associations or
corporations.

15. SUMMARY
• Reference Materials:
• Publication 583 – Starting a Business
and Keeping Records
• Publication 15 – Circular E (Employer’s
Tax Guide)
• Publication538 – Accounting Periods
and Methods
• Schedule C- Profit or Loss from
Business
• Schedule C-EZ New Profit from Business
(Sole Proprietorship
• Schedule SE – Self-Employment Tax
In summary in this lesson, I
explained the purpose of:
1. An EIN (Employer Identification
Number)
2. Defined the basic bookkeeping
and accounting methods and
terms.
3. Reviewed the different forms of
business organizations.
There is a lot to learn when you start
your own business and I hope that
this lesson has provided you with an
overview of what it takes to start
your business off right.
Best Wishes on Your New Business!

16. CARMEN I. VELAZQUEZ
ENROLLED AGENT,
PROFESSIONAL SERVICES
Website:
http://civelazquezea.com
Business Cell Phone:
321-527-4375
Get your Free Consultation
Today!