IRS Tax Tips
August 17, 2007 – STT-2007-18
Tax Advice for Starting, Operating or Closing a Small Business
To many citizens, running a successful business is part of the American dream. But while they may be experts in their chosen field, few small business owners are tax experts. From starting a new business to operating or even closing a business, the IRS has tax advice for small business owners.
The IRS Web site at IRS.gov has information devoted to the needs and interests of small business owners. Topics on the Web site answer many of the nuts and bolts questions that new or even experienced small business owners might have.
Many business decisions have significant tax implications. The structure and accounting methods you choose can dramatically affect how much tax you pay. Even before you check with your accountant or tax advisor, you can check out the IRS Web site for useful information.
For example, do you know whether your activities are considered hobbies or a business for tax purposes? Who must you inform that you are starting a new business? What structure is best for your business and what records do you need to keep? What does it mean to select an accounting method? All of these topics, plus a handy checklist for starting a business, are found in the section entitled “Starting a Business.”
Even businesses that have been operating for a long time encounter new and unusual tax situations. How do you change the name of your business? What do you need to know when your business grows and you hire employees? The money may be rolling in but what is taxable income and what may not be taxable? Speaking of taxes, just what forms do you need to file and more importantly when do you need to make payments? The answers to these and more than a half-dozen other questions are found in the section entitled “Operating a Business.”
When the time comes to close your business you will want to make sure that it is done properly. For some the closure of a small business may mean creating a different business structure. For others it will mean selling the business. Unfortunately for some it will mean filing for bankruptcy. The section entitled “Closing a Business” includes a handy checklist to make certain you do not leave any loose threads.
No matter what stage your business is in, you will find the tax help you need at IRS.gov in the tab marked Small Business/Self-Employed – Starting, Operating Or Closing a Business – on IRS.gov.