When you start a business, your goal is to bring in revenue so you can meet your financial obligations (e.g., pay the rent, cover your marketing costs, etc.) and make a profit. This enables you to stay in business and grow. To do this, you probably are focused on dealing with customers, suppliers, and employees (if you have them). But being in business means taking on a slew of responsibilities imposed on you by the government—federal, state, and local. This is no simple matter. You have to do it; failure can result in monetary penalties or worse…you could be forced out of business. How do you know what you need to know? The U.S. Small Business Administration is supposed to have answers, but they may not have all the ones you need.
Here are some resources to help you with your government-imposed responsibilities.
In addition to tax responsibilities (discussed next), you must not violate certain government-set rules, including:
- Minimum wage and overtime
- Workers’ compensation coverage
- Workplace safety
- Nondiscrimination in hiring, promoting, and terminating
Resources to learn about these and other federal-level requirements:
- Department of Labor (DOL) portal for new and small businesses. There are also links here to state resources.
- OSHA portal for small businesses, including the Small Business Safety and Health Handbook
- S. Postal Service (USPS) small business solutions
You know about your annual personal income tax filing. But being in business means other tax obligations. If you’re self-employed, likely you have to pay quarterly estimated taxes because there’s no income tax withholding on business income. Your business may have to file various returns, including an annual tax return (although sole proprietors include theirs with their personal income tax returns), quarterly employer tax returns, and, for some businesses, excise tax returns, and information returns of all sorts.
If you have employees, you have to withhold and remit certain payroll taxes in addition to filing those quarterly tax returns. And if you offer them various fringe benefits, there are nondiscrimination rules and annual filings required.
The IRS has a Small Business and Self-Employed Tax Center, where you’ll find links to popular topics. Tax responsibilities don’t stop with those from the federal government. State-level obligations are discussed next.
You may have various state and local obligations for your business. For example, you may be required to pay an annual fee to keep your business in good standing and you have to pay unemployment insurance for employees. Check with your business obligations through your state:
- Department of state
- Labor department
- Tax/finance/revenue department
Your locality may also have certain requirements, such as sales tax and signage limits. Check with your city, town, or county for other compliance rules.
You probably can never know everything you need to know. The best solution is to have a team of experts who can advise you on your responsibilities.
Motorsports racing driver Mario Andretti said: “I think it’s counterproductive in many ways to pretend to know things you don’t. You surround yourself with people who are the real experts.”
Your team should include, at a minimum, an attorney and CPA or other tax adviser. And when in doubt about anything, ask questions!