When starting a new business, it’s important to establish good cash management practices. A business doesn’t need to be generating revenue to open a bank account. In fact, it should be one of the first things a business owner does, even before they start selling products or services.
State and federal tax ID numbers (also known as an Employer Identification Number or EIN) are like a personal social security number for your business. They let your small business pay state and federal taxes.
A federal EIN is used by the U.S. Internal Revenue Service to identify a business entity. This 9-digit number is required to pay federal taxes, hire employees, open a bank account, and apply for business licenses and permits.
As a new business owner, you may hear the terms bookkeeping and accounting used interchangeably. While both bookkeepers and accountants work with financial data and help business owners manage their finances, they have complementary but different responsibilities. This blog post will distinguish between the functions of each and their respective roles in a business.
Owning a business presents opportunities for personal financial success and satisfaction in a particular occupation. However, it also comes with several different types of risk. These include economic, compliance, security and fraud, operational, reputational, financial, and competition risks. Risk managers are engaged in identifying risks and deploying proven techniques to treat each of these types of risks.
Taxes are important to consider when starting a business. Business owners must know the types of taxes that may apply to their business and understand the requirements and processes for paying them. It is also important that owners account for these taxes in their operational and financial plans. In this post we will discuss several types of taxes, how they are calculated, and how to pay them, as well as advance planning considerations. Please note that this information is not intended to be tax advice or guidance, nor is it a comprehensive coverage of tax issues.
You have assessed the feasibility of your business idea and created a plan to get started. What comes next? How do you turn your idea into a legally recognized Illinois business? Here are the four things you should do first.
1. Choose an organization structure for your business.
There are several ways to organize businesses in Illinois, each with its own legal and tax implications. Your form of business determines which income tax return forms you must file.
The most common forms of business are:
We all know that a barometer is an instrument used to measure atmospheric pressure. Another definition of a barometer is something that reflects changes in circumstances and opinions. A good business barometer could be an annual review of that business to determine current trends and can also be used to forecast the future, and thus, to revise a strategic business plan.
Many experts recommend saving 10% to 15% of pretax income annually for retirement. But while Americans accumulate the majority of their retirement funds through employer-sponsored defined-contribution plans, according to a report from the Pew Charitable Trusts, many small business owners and their employees are not afforded this option.
One of the most significant changes in the Tax Cuts and Jobs Act will be a 20% deduction for all pass-through businesses. (Businesses that pass income to the owner to pay the income taxes.) This means, as an example, if your revenue in 2018 was $500,000, you will pay taxes on only $400,000 of that revenue. In a 15% tax bracket, the savings will be about $4,500 on a gross basis and even on a net basis the savings will get your attention. It is anticipated that this will impact roughly 95% of the small businesses in the United States.
Don’t let the hustle and bustle of the holiday season cause you to forget about your business. Crossing these items off your to-do list before the end of the year will help you not only close out 2018 but also get off to a good start in 2019.