1. Type of Business —You will need to decide the type of business you are going to establish. The most common types are sole proprietorship, partnership, corporation, S corporation and Limited Liability Company. Each type reports its business activity on a different federal tax form.
2. Type of Taxes — The type of business you run usually determines the type of taxe...s you pay. The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax.
3. Employer Identification Number — Most of the time, a business needs to use a federal Employee Identification Number for tax purposes. Check IRS.gov to find out whether or not you are required to obtain and use an EIN. If you do, you can apply for an EIN online.
4. Record keeping — Keeping good records will help you when it's time to file your business tax forms at the end of the year. They help track deductible expenses and support all the items you report on your tax return. Good records also will help you monitor your business's progress and prepare your financial statements. You may choose any record keeping system that clearly shows your income and expenses.
5. Accounting Method — Each taxpayer also must use a consistent accounting method, which is a set of rules that determine when to report income and expenses. The most common are the cash method and the accrual method of accounting. Under the cash method, you typically report income in the year you receive it and deduct expenses in the year you pay them. Under the accrual method, you typically report income in the year you earn it and deduct expenses in the year you incur them. This is true even if you receive the income or pay the expenses in a future year.
6.Give David M.Green Bookkeeping and Tax Service a call.There are many other items that need to be completed as well, setting up bookkeeping,payroll,consulting applying for a state license if you use a fictious name other then your own name.