Robert J. Fedor, Esq., L.L.C.

Tax matters to consider when starting a business

When making the decision to start a business, the majority of small business owners are most concerned about financing options and turning a profit. When starting out, small business owners likely have a long laundry list of considerations, chief among these should be both federal and state tax obligations.

Small business owners are typically high-achieving individuals who thrive in challenging environments. Many are big-picture people who set a goal and then figure out how to achieve that goal. The majority of small business owners are not, however, well-versed in tax matters.

Upon establishing a business, small business owners need to determine the type of business entity they plan to form. For example, the tax liabilities of a sole proprietorship are very different from that of a business that is registered as a corporation. Along with how a business entity is classified and registered, it's also important for business owners to understand exactly what taxes they are required to pay.

Small business owners would also be wise to plan well in advance for tax season. When setting up a business, it's best to also establish how business and tax-related records are kept. This is also the most opertune time to plan how financial records are kept and how and when expenses are paid.

Many small business owners hire a tax or accounting professional to provide advice and assistance with these tax and financial matters. Small business owners who fail to take steps to plan for tax matters may find themselves facing criminal charges related to tax crimes. In these cases, an attorney who handles tax crime matters can be an invaluable resource.

Source: The Exponent Telegram, "IRS: Tax tips if you're starting a business," July 3, 2013