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Checklist for Starting a Business – per IRS website changed a little<br /><ul><li>What is your plan – have one
Business plan/model
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Checklist for starting a business


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Checklist for starting a business

  1. 1. Checklist for Starting a Business – per IRS website changed a little<br /><ul><li>What is your plan – have one
  2. 2. Business plan/model
  3. 3. How do you want to take money from this business
  4. 4. Funding
  5. 5. When ready…apply for an EIN (Employer Identification Number) and state registrations
  6. 6. Once you have the business plan in place and ready to execute – apply online with Form SS-4
  7. 7. This filing can set off filing requirements so don’t file until you are ready
  8. 8. Select a business structure – use a lawyer and a CPA to pick the correct one
  9. 9. Sole Proprietorship (Schedule C on your personal Form 1040) – SE taxes OUCH!
  10. 10. Partnership – for 2 or more people (Form 1065) – partners receive guaranteed payments, not W-2 wages, SE taxes OUCH!
  11. 11. Corporations – double taxation (Form 1120)
  12. 12. S Corporation – favored, restrictions include one class of stock, only 100 shareholders, corporations, partnerships and nonresident aliens cannot be shareholders – tax free distributions when there is basis (no double taxation), (Form 1120S) individual shareholders pay the tax via passthrough
  13. 13. LLC – very common, needs to elect classification on Form 8332 (sole proprietor, S or C corp, or partnership)
  14. 14. Choose either a calendar year or fiscal tax year
  15. 15. Short tax year
  16. 16. Individuals are calendar years
  17. 17. Determine your accounting method
  18. 18. Cash method – report income/deduct expense when received or actually paid
  19. 19. Accrual method – report income/deduct expense when earned or incurred – regardless of when it is received or actually paid
  20. 20. Know your tax deadlines and don’t miss them
  21. 21. 3/15 tax return due for corporations
  22. 22. 4/15 tax return due for partnerships and personal returns
  23. 23. Extensions give you 6 more months to FILE – never an extension to pay what was due
  24. 24. Estimated taxes are:
  25. 25. 4/15, 6/15, 9/15 and 12/15 for businesses
  26. 26. 4/15, 6/15, 9/15 and 1/15/XX for individuals
  27. 27. File returns TIMELY to “start the clock” – statute of limitations is 3 years and forever for fraud
  28. 28. Employees or independent contractors
  29. 29. Understand the cost of employees – it costs more than their hourly rate or salary
  30. 30. ER has to match the SS and Medicare portion of their wages and is only the fiduciary to submit the payroll taxes TIMELY to the IRS and State
  31. 31. Quarterly/Yearly the ER has to pay unemployment taxes on their employee’s – high turnover increases this cost
  32. 32. Will you be required to maintain some health insurance for your employees?
  33. 33. Independent contractors are more favorable, but they can’t solely work for you – read Publication 1779 from the IRS
  34. 34. Behavioral Control – who tells you how to do it and trains you?
  35. 35. Financial Control – are all costs reimbursed? Do you incur a profit or loss?
  36. 36. Relationship to the Parties – employee benefits (insurance, PTO)
  37. 37. Have a written contract
  38. 38. The IRS wants you to be an employee because it means more revenue for them
  39. 39. GOOD RECORD KEEPING – it is ALL right here…success or hardship
  40. 40. Pick an accounting solution/software (Quickbooks/Peachtree…you get what you pay for)
  41. 41. It needs to be reliable
  42. 42. It needs to be available if other people need to access it
  43. 43. It needs to do all the basic accounting functions (debits=credits, Balance Sheet is perpetual)
  44. 44. It needs to be backed up in case of electronic failure or malfunction so it can be restored
  45. 45. It needs to be safeguarded
  46. 46. NOT doing this is risky and costs more money and headache in the long run
  47. 47. RECONCILE!!
  48. 48. 28 -30% of businesses declaring bankruptcy cite problems with their financials as their main reason/cause for filing – don’t let that happen to you
  49. 49. Keep copies of your expenses – the burden of proof falls on the taxpayer to substantiate their claims on their tax returns. KEEP YOUR RECORDS
  50. 50. FRAUD – things to look out for:
  51. 51. Desperate times call for desperate measures – even close friends and people you have known
  52. 52. People with opportunity and they justify their reason – PREVENT IT!
  53. 53. HOW – never give one person all of the power
  54. 54. If you have a bookkeeper, look over their shoulder or have someone else do it
  55. 55. The best thing you can do is have someone else reconcile the books/bank statements if you don’t do it yourself. This one simple action let’s that person know you will see everything. Look deeper into things that look out of place.
  56. 56. Fraudulent vendors – almost the same name, common address as person committing the fraud
  57. 57. Sign all checks yourself – a hassle but very effective
  58. 58. Have a relationship at your bank so someone else is looking out for you
  60. 60., – both are great tools to get the assistance you need