Steps to handling the tax implications of obtaining a business license

Written By Steps To Faculty Published June 22nd, 2010

Virtually all businesses, whether it is an online format, a physical firm, or a corporation, are required by federal and state law to obtain a business license at least in the state where the business will reside. In some instances, a business license can be filed in the states of Nevada and Delaware for their simplified filing process. But there are some tax considerations to ponder after you file for a business license. Let’s take a look.

Step 1 Talk to the county clerk’s office

Find out your state’s specific tax codes that are associated with obtaining a business license. Each state is different and the rules for each state also vary from the federal and county-related regulations. Some states, such as New York, require a special tax code for the New York City region in addition to the general county locale.

Step 2 Review the tax laws

Much of the reason behind you obtaining a business license is for the county’s state, and federal governments to collect taxes from your business as you intake revenues. Be sure to select the appropriate choices when applying any taxation on your business license. For example, if you file as an S corporation over a C corporation, you may be subject to double taxation.

Step 3 Determine the tax timetable

Upon receipt of your business license, the county clerk’s office and the state taxation in your region will advise you as to the frequency of tax filings for your business. Many states have recently increased this rate due to the economic downturn and the need to generate state revenues rate due to the economic downturn and the need to generate state revenues. For example, New York now requires quarterly tax reporting and filing rather than annual. That is four times what it used to be.

Step 4 Figure your tax costs

Once you know how often you’ll be paying taxes, you will need to include this in your operating budget.

Step 5 Plan ahead

To avoid having your business go under in its first year of operation, be sure to have sufficient cash flow from operations to cover these inevitable tax costs. Many business owners fail to consider this and end up losing their company due to taxes.

Remember, you cannot avoid taxes.

Roger Due

Investing in Your Destiny® & Coaching Program - Wealth Building Summit Dallas, Texas

My name is Roger Due and I am from Albuquerque, New Mexico and I am the owner of the Monsano software company. This has been an absolutely fantastic conference. This is the best I have ever been to.