Before you start any business venture consider your accounting options, for all serious companies need a solid financial program. It can be done simply and directly if you follow a few basic steps-Do not complicate your accounting, keep it simple and straightforward. If you are running your own single person business you will not need to communicate any particular data or filings to the Internal Revenue until you actually start putting someone on your payroll.
All you will need to do is to acquire a license under form of occupational business, although not all areas require this. Being the owner of your venture you will have to declare all city and state tax on any wholesale or retail sales your firm acquires. Check before you do for businesses that provide simple service often are exempt from state tax collections.Your foremost concern should be to get your business going, for a business made up of only one owner will be of no interest to the IRS, until you have filed your initial tax return. Once you have communicated your profits, both the sales and expenses can be included in one sole bank account.
The best way to avoid all tax issues is to keep to good trade and keep your accounting records simple and accurate. A business that runs on a straightforward financial program will have no trouble to keep afloat.
Having said this, more than eighty percent of small ventures usually fail within the first five years. This is why, although you should be aiming for your business to thrive, if it does fail as a one man venture you are not liable to any particular declaration. Your business simply stops and you have no special form to fill out or communication to make to the IRS.
You may be wondering how you get your own salary on a one man based business. The simplest way is to draw the money out directly, without having to bother about payroll taxes or quarterly forms. Try and keep it as simple as you can, for you will probably have a loss of income during the first year. This is why you should consider keeping any job you have for the first year, to sound the field and cover losses and pay for your daily expenses.
Once you have reached the five year hurdle and you find that your venture is still afloat, only then you should consider creating your business under another entity that will help you save on taxes and other costs. Even in this case you should keep to straightforward bookkeeping entries and transfers from your initial one man venture to the new entity you will have created, to avoid any tax penalties. Only then should you consider leaving your job, after the five year period is up.