Tax priorities for new business owners

Are you a new business owner? If so, you know that you now have a lot more tax obligations on your plate. Use the following items as a checklist to help you prioritize common tax issues that often trip up new business owners:

• Classification of workers: Determining whether a worker is an employee or independent contractors a matter of law, not the choice of the worker or the employer. If a worker controls when, how and where the work is done, they're more likely a contractor.
• Federal employment tax deposits: Called trust fund taxes, these deposits must be made according to the appropriate schedule, depending on deposit amounts. Find out more about employment taxes on the IRS website.
• Quarterly estimated tax payments: Business earnings are not subject to tax withholding. That means business owners' income and Social Security tax obligations are met through quarterly estimated tax payments. Start adding payment dates to your calendar to help you keep track.
• Recordkeeping: New businesses need a good recordkeeping system to make tax filing easier and accurate. You can start building an effective record library by creating categories for the different types of documents you'll need when filing taxes.

• Disaster protection: Financial and tax records need to be protected to ensure business continuity in the event of a disaster. Consider keeping digital records in the cloud or hard copies in a safe deposit box offsite.
• Tax reporting: Be aware of what the IRS deems as negligence vs. tax fraud. Tax mistakes that include underreporting income and over-reporting expenses may be considered willful tax evasion and may lead to fines or worse — jail time.

For guidance in getting your new business's tax obligations in order, give us a call at 203-468-8133.