Small business owners who are preparing to open their doors must first open a bank account, establish an expense tracking system and select their booking service provider. Next, they will need to research and complete the following tasks.
Establish a Payroll System
Almost all small business owners won’t be able to remain a one-person show for long. Because this may involve hiring temporary freelancers and part-time employees, startups must decide whether hired individuals are employees or independent contractors. A payroll schedule and tax withholding guidelines need to be established for employees. Although the IRS has an exact definition for independent contractors, there are always exceptions and best practices. Small business owners will probably be required to file 1099s for contractors at the end of the year.
Set up a Payment System
Small business owners can no longer solely rely on traditional payment methods, such as cash and checks. Major credit card providers, such as Visa, Mastercard, and American Express, as well as most merchant processors, offer affordable credit card transaction system and equipment. Startups who rely on e-commerce should consider offering alternative payment methods like PayPal, Stripe, Shopify, Transferwise and Google Wallet. There are associated costs with different payment methods, but they directly drive profits. Some of these will save entrepreneurs the trouble of setting up merchant accounts.
Paying Taxes
First, tax obligations depend on the business’ legal structure. Those who are self-employed through an LLC, partnership or sole proprietorship, may claim business income on a personal tax return. Corporations are separate tax entities, so they are independently taxed from owners. Most store owners pay estimated taxes every quarter. The self-employed must withhold taxes from their income. Online commerce is a challenge for sales tax regulation compliance. Global customers are usually exempt from domestic sales taxes.
Taxes, payment systems and payroll administration can be quite complex, so it makes sense to ask a professional accountant for detailed information about the state’s specific regulations.