Starting a New Business
When a builder uses a cheap mixture of concrete for a foundation it can cost a homeowner a fortune later. It is the same when starting a business. Several times this year I have thought “Oh my what a mess” after clients started a business and formed an LLC to operate under and proceeded without any guidance. There are issues to address that if done up front will save you some headaches and money later on. Some of the issues involve entity election with the IRS, getting a federal tax identification number for the new business and opening a bank account. In addition the partners, members, or shareholders need to have agreements as to how the business will operate, assignment of responsibilities, and division of profits and losses, capital and liabilities. I know you want to save money and being frugal can be a good business trait but you do not want to operate a business on the “cheap” and wind up paying more in time, money and aspirin.
What I have seen happen is you wind up with a bank account with a tax identification number from the IRS for one type of entity and realize that your business is another type and get another tax identification number and another bank account and then have to sort out the accounting between the two possibly file multiple tax returns for your one business. As I said “oh my what a mess.” So let’s avoid the mess and start with a call to me or your CPA/Tax Preparer and most likely also talk to an attorney and get a fine foundation established for your business that will bring you benefits for many years. There will be much to discuss but please do it the right way. For your sake and mine. While I can generate more fees from a mess I would prefer to help you do things correctly and avoid a mess. I would rather have less money and a better quality of life, but that is just me. I will also gladly help you fix a mess and move forward with you. So call me today to get started or get cleaned up.
Especially call me before you take money out of a retirement account to finance a business. They can be very costly from a tax standpoint and you likely have other options.
I have over ten years experience helping the public start businesses and preparing their tax returns. So call me today.
Jeff Haywood, CPA
I prepare the following types of tax returns:
Federal and State Returns
Also, I am available for tax planning and discussions about business, retirement planning and life goals.
For recent US income tax content see the following links:
Begin With The End In Mind
If the band you are in starts playing different tunes
Where Is It? Tax Refund
Deadline for 2010 Personal Tax Returns Moved
Now is the time to file those late tax returns for previous years
IRS: 8 Things to Know if You Receive an IRS Notice
IRS: Nine Fact on Filing an Amended Return
IRS: Eight Facts on Penalties
IRS Top Ten: Making Federal Tax Payments
Forming a New Business – Please Consult With Your CPA First
Questions After I Have Filed My Return
For a full list of prior posts see the CPA Tax Blog.
As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.
This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.