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What Defines the Start of a Business for Tax Purposes?

What defines the start of a business for tax purposes? It's important to know all tax details before opening a business to avoid penalization. Learn more from our business tax experts at Cook CPA.

Starting a business requires the owner to be diligent when it comes to handling a variety of matters. One of the most important obligations that a business owner must satisfy is those to the Internal Revenue Service and other agencies they may owe taxes to. Failing to pay taxes as a business owner could substantially impact a new business. If you need assistance to manage the tax liability for your new business, you should consult with an experienced Roseville business services accountant today. At the Cook CPA Group, we recognize that it can be daunting to venture into a new business, and we are here to offer you the accounting services you need to operate your business efficiently. Our team of accountants is here to discuss your concern about the date a business starts for tax purposes.

Determining When a Business Starts for Tax Purposes

When deciding to open a business, it is important to understand when a business has started for tax purposes. It is normal for a new business owner to misconstrue when the company is liable for taxes. In some cases, a business owner may believe that their company must only pay taxes when they start advertising or when the company draws in clients and begin to earn income. However, for tax purposes, the start date does not consider these factors.

Normally, the start date for a business is when the business is registered. This means that a company like an LLC or a partnership is responsible for paying taxes on the date they register with a particular state. Note, however, that it may be possible for a business to choose their start date.

Additionally, when registering a business with a state, a company is often required to also register with the IRS in order to receive an Employer Identification Number (EIN). A company’s EIN is used to identify the company for tax purposes.

It is important to note that the start date of a business can change depending on other factors. For example, under certain circumstances, the IRS may analyze a company’s activities to determine whether they are liable for taxes.

Fiscal Year Start Date

In some cases, the fiscal year of a business may be more important than the registration date. When a new business is registered, the fiscal year of the business will be its first tax year. Additionally, if you were operating business prior to registering the business, your taxes for the previous year may have to be considered.

As explained, the start date of a business is subject to a variety of factors. If you are unsure about how the IRS may determine the start date of your business, you should speak with an experienced Roseville business accountant as soon as possible.

Business and Tax Services Our Firm Offers

Learning the start date of your business is important for determining when you must calculate taxes for your business. However, there are many other factors that a business owner must consider when beginning a new endeavor. The Cook CPA Group is here to offer you a wide range of services that will be highly useful to a business owner.

Tax Preparation and Planning

Tax preparation and planning is an important part of every business. For a new business owner, preparing a tax return for the company can be a tedious and complicated matter. Not only do you have to keep up with a number of tax regulations, but you must also ensure that your tax returns do not contain any serious errors. A serious mistake on a tax return could mean that you will have to deal with a tax audit, or you could end up with a large tax bill.

Many new business owners make the mistake of labeling tax liability as an afterthought, which can easily come back to substantially affect their company. Our firm is here to offer you the accounting services you need to manage taxes for your business. We can help you with some of the following tax issues:

  • Managing payroll taxes for the company
  • Ensuring a tax return is free of errors to avoid a tax audit
  • Maximizing your tax deductions
  • Help you manage any foreign assets

This is not an exhaustive list. You can speak with our experienced team of accountants to determine other services we can provide your company.

Strategic Business Planning

Strategic business planning is another service we offer that can greatly assist your business. For example, if you need assistance with debuting a new product to consumers, our CPAs can help you create financial plans to fund this new product.

We also offer the following services:

 Work with Our Experienced CPAs to Determine Your Business Start Date

If you are concerned about when your business can be taxed after incorporation, you should speak with an experienced Folsom tax preparation accountant today. The skilled accountants at the Cook CPA Group possess a wealth of experience handling a variety of business tax issues, and we are ready to help you manage tax liability for your business. To schedule a free consultation to discuss the tax liability for your new business, you should contact the Cook CPA Group at (916) 432-2218. You may also contact us online to schedule your free consultation.