Navigating the necessary IRS steps in order to successfully file your taxes as a small business owner can be tricky. Thankfully, the federal powers that be present an abundance of information pertinent to the subject via an official video. In this invaluable online IRS video lesson regarding what you need to know, a slew of important points are imparted. To help lead you in the right direction, the employer identification number, record keeping requirements for tax purposes, bookkeeping and accounting methods (cash method and accrual) and who to select as your paid tax preparer are all discussed in expert detail.
What is the EIN?
One key tool for use by some small business owners is the EIN (federal Employer Identification Number). At the IRS video portal, you learn whether or not you are among those required to obtain this particular number, as well as how to obtain one if need be. The most probable reasons you will need an EIN is, according to the IRS, if “you pay wages, have a self-employed retirement plan, operate your business as a partnership or corporation, or if you are required to file any of these tax returns: employment; excise; fiduciary; or alcohol, tobacco, and firearms.”
To find out if you are obligated to get this number, go to www.irs.gov and type in the keyword EIN. There, you’ll find an application for an EIN to fill out, which you can then later cancel if your name and social security number do not match official social security administration records. This is also true should your small business already be attached to an EIN.
The second important tool demystified in this pertinent video concerns specific IRS paperwork necessary for filing your taxes. This topic is covered in detail clarifying the different types of ownership structures, which include sole proprietorships, partnerships, limited liability companies or LLCs, S corporations and corporations.
Picking a professional
The third salient lesson on this official video covers how and when to choose a paid tax preparer. When pursuing a professional, the IRS instructs you to stay away from “preparers who claim they can obtain larger refunds than others.” The second tip in this lesson, which may not be so obvious, is to “avoid preparers who base their fees on the amount of your refund.” Also, ensure your tax preparer has gone through the necessary IRS registration and certification process. This can be done by making sure the person with whom you are working holds a valid Preparer Tax Identification Number or PTIN.
As the video describes, “An enrolled agent is a person who has earned the privilege of representing taxpayers before the IRS.”
This article was written by Jane Lasky for Small Business Pulse