The last year witnessed the launch of a record number of businesses in the US. Several working professionals resigned from their jobs to launch their businesses. 5.4 million new business applications followed the ‘Great Resignation’; there are a lot of business owners filing their maiden business tax returns. IRS applies specific taxation rules based on the business structure of the companies. CNBC reports that the new business should check with the IRS and confirm. The IRS levies taxes based on the business category and the employee structure of a company.
Business structure plays a vital role in taxation
Reports suggest that the majority of entrepreneurs don’t understand the tax structure and face great difficulties. The new business owners need to hire professional advisors to manage their tax returns. The expert tax filers analyze the company’s structure before filing the returns. CNBC quoted Sheneya Wilson, CPA, and founder of Fola Financial in New York; she said, “A lot of the time, entrepreneurs don’t understand the default taxations of their business. A tax professional who is experienced in your niche will be of better service to you in making sure you’re maximizing your tax profile. Imagine trying to do bookkeeping for seven months right before you’re filing your taxes when it typically should be done once a month.”
Businessmen should hire professionals
Business owners should file tax returns accurately to avoid penalties. IRS verifies all the information before processing the tax returns. CNBC reports that IRS charges $210 monthly for not filing a partnership return. The fines and additional charges can be impossible after some time, so the companies need to be extra cautious. CNBC quoted Howard L Markowitz, who said, “What it boils down to is if you’re a single-member, you file on a Schedule C; if you are a multi-member, you file on a partnership. If they don’t have the confirmation from the IRS, they aren’t a corporation.”
Business taxpayers should find the right professionals and file their returns after understanding the tax policies. The businesses must create an Employer Identification Number (EIN) and other necessary documents.