From washing cars and selling cookies, to expensing vehicles and buying assets — you’ve come a long way.
Whether you washed cars for pocket money, sold cookies to raise money for your organization, or did something else to earn money as a kid, you’ve probably had the entrepreneurial spirit your whole life. Now that you’ve taken your business dream into the marketplace, you’ll find that things are different than they used to be.
We’ve put together a few tax tips that will make things easier for you (and please Uncle Sam), including:
- How to choose an accounting method
- What to do about estimated taxes
- Which expenses to track
When you’re launching a startup, you have a lot of things on your mind, and tax considerations probably aren’t among them. But there are a few simple things you can do right now and in the months ahead to make things easier on yourself and your startup at tax time.
Take a Number
You’re required to associate your startup with an ID number so the IRS can process your tax return and any other forms and documents you file.
- If you’re a solopreneur—a sole proprietor and have no employees—or if you’ve created a single-member LLC (Limited Liability Company), you can usually use your own Social Security number as your tax ID number.
- Otherwise, you’ll need to obtain an Employer Identification Number (EIN) to put on your IRS forms.
- To get an EIN, apply online at the IRS website, by mail, by fax or, if you’re an international applicant, you can call 267-941-1099 to apply by phone.
Cash or Accrual, the Choice Is Yours — Maybe
The two most used ways to report your startup’s income and expenses for accounting purposes are the cash basis and the accrual basis. Each has different