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New Business Tax Checklist

 

Starting a new business involves several critical steps to ensure compliance and financial success. Use this checklist to navigate the tax and setup requirements efficiently.

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1. Choose a Business Structure

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Steps to Take:

  1. Research Options – Compare sole proprietorships, LLCs, S Corps, and C Corps based on liability, taxation, and operational needs.

  2. Consult a CPA or Attorney – Get professional advice on the best structure for your business goals.

  3. File Formation Documents – Submit Articles of Incorporation (for corporations) or Articles of Organization (for LLCs) with your state’s Secretary of State.

  4. Obtain an Operating Agreement (for LLCs) – Defines member roles and business rules.

 

2. Register Your Business.

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Steps to Take:

  1. Apply for an EIN (Employer Identification Number) – Free application at IRS.gov.

  2. Register with the State – File for state business licenses, permits, and sales tax registration if applicable.

  3. Check Local Requirements – Some cities/counties require local business licenses or zoning permits.

  4. Set Up a DBA (Doing Business As) – If using a name different from your legal business name, register a DBA with your state.

 

3. Open a Business Bank Account

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Steps to Take:

  1. Gather Required Documents – EIN, business registration, operating agreement (if LLC), and business license.

  2. Choose a Bank – Compare small business account features, fees, and online banking options.

  3. Open a Business Credit Card – Helps separate expenses and build business credit.

  4. Establish a Payment System – Set up a merchant account or use payment processors like Square, PayPal, or Stripe.

 

4. Set Up a Bookkeeping System

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Steps to Take:

  1. Select Accounting Software – QuickBooks, Xero, or Wave for tracking income and expenses.

  2. Determine Accounting Method – Choose between cash or accrual accounting.

  3. Create a Business Budget – Plan for startup costs, operating expenses, and future tax obligations.

  4. Hire a Bookkeeper or CPA – Outsourcing can save time and improve accuracy.

 

5. Understand Business Taxes

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Steps to Take:

  1. Determine Tax Filing Requirements – Sole proprietors file Schedule C; LLCs, S Corps, and C Corps have different filing obligations.

  2. Register for State Taxes – If required, sign up for sales tax, payroll tax, and business income tax accounts.

  3. Identify Deductible Expenses – Understand what business costs can lower taxable income.

  4. Consider an S Corp Election – If eligible, file Form 2553 with the IRS to save on self-employment taxes.

 

6. Make Estimated Tax Payments

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Steps to Take:

  1. Calculate Quarterly Tax Payments – Use IRS Form 1040-ES or consult a CPA for estimates.

  2. Mark Due Dates – Payments are due April 15, June 15, September 15, and January 15.

  3. Pay Taxes Online – Use IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS).

  4. Set Aside Funds – Allocate a percentage of income each month for tax payments.

 

7. Maximize Tax Deductions

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Steps to Take:

  1. Track Business Expenses – Use accounting software to categorize costs.

  2. Set Up a Home Office (if applicable) – Deduct a portion of rent/mortgage and utilities if working from home.

  3. Keep a Mileage Log – Deduct vehicle use for business travel.

  4. Consider Retirement Contributions – Open a SEP IRA, Solo 401(k), or SIMPLE IRA.

 

8. Keep Proper Tax Records

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Steps to Take:

  1. Organize Receipts and Invoices – Store digital or physical copies for at least three years.

  2. Maintain Payroll & Contractor Records – Issue 1099-NEC for independent contractors paid over $600.

  3. Review Financial Statements Monthly – Helps with cash flow and tax planning.

  4. Backup Digital Records – Use cloud storage for extra security.

 

9. Work with a Tax Professional

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Steps to Take:

  1. Consult a CPA – Get tax advice tailored to your business needs.

  2. Plan for an S Corp Election – If applicable, file early in the tax year.

  3. Stay Updated on Tax Laws – Follow industry news or work with a tax professional to avoid compliance issues.

  4. Schedule an Annual Tax Review – Ensure deductions are maximized and liabilities are minimized.

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By following this checklist, you can start your business on the right foot and avoid costly tax mistakes. Need help? Contact Dylan Razzagone, CPA for expert tax guidance.

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