Starting a business can be one of the most exciting times in one’s life. However, it can also be one of the most time consuming. Because starting an entrepreneurial venture can require so much time to insure its success, many times the owners of new businesses will overlook certain aspects of starting a business that should be addressed early on. These issues can lead to larger problems in the future. One of the most important aspects of starting a new business is insuring that the business is set up properly. From this perspective, it is immaterial whether the business is organized as a limited liability company, a partnership, a corporation or otherwise. Rather, the important part is to make sure that whatever entity you choose is formed properly. This is particularly true where there is more than one owner of that business. Proper formation is important because later disputes between owners can be very costly to the success of a business if the structure for resolving those disputes is not spelled out in advance. Another costly oversight can be the decision to avoid dealing properly with tax obligations.
When it comes to taxes, most business owners are aware that income, employment, sales and use taxes exist; however, not everyone is aware of their obligations with respect to those taxes. The best way to resolve any future potential tax problem, is to avoid having the problem in the first place. This means that all new businesses should develop a relationship with an accountant that can advise them on the business’s tax obligations and assist them in fulfilling those obligations. The new business owner should also maintain appropriate records of income, expenses, sales, purchases and other items. A skilled accountant can use this information to assist your business in complying with tax laws.
Unfortunately, however, it is a fact that not all businesses do avoid future tax problems by addressing the tax compliance issues at the outset of a venture. It is also possible that a prior interpretation of the tax laws is reinterpreted or interpreted for the first time by the government so that your business now owes tax for something it previously believed did not owe tax on. Regardless, when one of these problems arises, there are procedures in place at both the federal and state levels for resolving tax disputes. While conceptually straight forward, based on the complexity of the business venture, its income, its expenses, its assets and its liabilities, it may be appropriate to hire a professional to assist you in resolving tax problems. These issues may include an inability to pay an income or employment tax liability, the filing of unfiled tax returns (known as non-filers), the personal assessment of employment or sales taxes against an officer of the business, the availability of entering into a deal with the government for less than the total amount of tax due (Offers in Compromise) and so forth.
While procedures exist to resolve tax issues that a new business may face, avoiding these issues in the first place is always the best part of a new business plan.