How to be a SUCCESSFUL Business Owner

Small Business Responsibilities

  • Choosing a Business Structure
    • Meet with an attorney and CPA to set up the structure that best suits your legal and financial needs
      • Sole Proprietor
      • State formed
        • LLC (single member or multi-member)
        • C Corporation
        • Partnership (two or more partners)
      • Taxation choices
        • LLC = default taxed as a Sole Proprietor or Partnership unless election made to be taxed differently
        • S Corp Election = F1120S pass through taxed on shareholder’s return
        • Partnership = F1065 pass through taxed on partner’s return
        • C Corporation = F1120 and pays tax
      • Applying for an EIN and filing tax returns according to the business structure reported on the EIN application or IRS election forms. KEEP the IRS SS4 letter or S Corp Election approval letter in your business records!
    • Setting up Books and Records
      • Why?
        • https://www.irs.gov/pub/irs-pdf/p583.pdf
        • Monitor the progress of your business
        • Use to file correct and accurate tax returns
        • Substantiation for your income and deductions with supporting documents
        • Prepare financials used to obtain financing to grow your business
      • How?
        • http://jkwcpa.com/images/JKWCPA-Accounting-101-for-Small-Businesses-eGuide.pdf
        • Contribute assets (cash and/or tangible personal property) and record the owner’s equity with the capital investment
        • Record all invoiced sales and receipts:
          • IRS Form 1099s ~ only report amounts you received over $600 if filed for a sole proprietor, LLC not taxed as an S Corp, and partnership.
          • Bank deposits
          • Petty Cash
          • Credit Card Receipts reports ~ Form 1099K is only received if charges are over a merchant vendor’s threshold.
          • Billing company reports
        • Record all Expenses:
          • Invoiced Payment Receipts
          • Canceled checks
          • Credit Card Sales Slips
        • Reconcile all transaction accounts for correct recording of assets, liability, income, and expenses:
          • Reconciled Petty Cash
          • Reconciled Bank Statements
          • Reconciled Credit Card Statements
          • Loan Statements
          • Billing reports
          • IRS form 1099s
          • Payroll reports: Form 940, Form 941, Form W-2/W-3, TWC
        • What happens?
          • If I do not file proper formation documents?
            • Business termination
            • Penalties assessed
            • Excess taxes
          • If I do not keep proper books & records?
            • Understated/Overstated Income/expenses
            • Excess taxes
            • Penalties & Interest assessed
            • If excess understated income and/or overstated expenses could face Fraud charges and prosecution: Remember Al Capone!
          • If I do not file and pay the proper tax forms?
            • Penalties & Interest assessed
            • Business termination

Sales tax and payroll taxes are a fiduciary responsibility that if not remitted to the taxing authority could be ruled as theft.

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