Congratulations! You want to start your own business!
Most people would not think of starting a new business without first investigating their market potential, competition in the area, how much it will cost them to operate, etc. Yet, so often, their tax and accounting requirements are last on their TO-DO list. NOT a wise decision!
A Word of Caution: Penalties can cost MORE than one hour of consultation!
First hour $65
Let's talk! (865)482-2765. (This number forwards to my home and then to my cell phone, so please let it ring several times.)
Basic Steps: - Decide on the "form" of business:
- Corporation - Pub.542 Corporations
TN Secretary of State - Partnership - Pub.541 Partnerships
- Sole Proprietor - Pub.334 Tax Guide for Small Business
- Obtain Employer ID #s:
(used for many things other than having employees.
Most banks require one for opening any business bank account)
Corporations and Partnerships MUST apply.
Sole proprietors may not need one at all if they will not be having employees.
- Obtain business licenses from City and/or County of business location:
- Register for personal property tax with County Property Tax Assessor
- Register with State to obtain Sales Tax ID# if your business involves sales of goods: Tennessee Business Registration
This site describes the TN Streamlined Sales Tax Initiative which became effective January 1, 2008: TN Streamlined Sales Tax Initiative
Many tax issues are difficult to understand. That is why you've come to a professional. But, I'll need your help in understanding the particulars of your business. It might help us both for you to do a little reading. Using this link, locate the IRS Publication that deals with your particular issue.(supposedly written for the average user)
IRS Publications
Highlight the topic you are interested in,
Click on Retrieve Selected Files below the box,
Then you can save it to your computer desktop (click on the floppy disk at left edge of toolbar) and read as time permits or click on the printer to print a hard copy.
Selected Topics:
Travel/Per Diem
It is commonly thought that you can take travel expenses when you go away from your main family home. That is true, but some criteria must be established. The first is determining your "Tax Home". That's where it sometimes gets difficult.These publications do a pretty good job of helping you understand the requirements.
Pub.463 Travel, Entertainment, Gifts and Vehicle Expense
Pub.1542 Per Diem
Employee vs. Independent Contractor
Having employees is expensive. As an employer you are required to:
1) withhold FICA and Federal Income taxes from your employees' pay, match the FICA taxes withheld and pay these taxes over to the IRS either weekly, monthly or quarterly,
2) File Form 941, Employer's Quarterly Payroll Tax Report at the end of each quarter,
3) File Quarterly State Unemployment Tax Report and pay a percentage of the first $7000 of annual wages paid to each employee
(NOTE: This is an employER tax and not withheld from the employee's pay),
4) File an Annual Employer's Federal Unemployment Tax Return and pay .008 of the first $7000 of annual wages paid to each employee
(NOTE: This is an employER tax and not withheld from the employee's pay), and
5) Prepare and file Form W-2 to each employee by Jan 31 of each year.
Oftentimes, an employer thinks "It's just too much trouble", and they decide to make their workers "contract labor". NOT always the legal thing to do. And, when the IRS catches them doing this, it becomes MORE expensive than it would have been to file all those reports and pay all those taxes. The following link can help you determine if you have employees or contract laborers working for you. Employee vs. Contract Laborer - A 20-factor test
The IRS and the State of Tennessee offer GREAT RESOURCES
IRS for Businesses
TN Online Services
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