REQUIREMENTS OF A NEW BUSINESS
The first step in understanding how to operate a business is to understand the rules under which all businesses must operate. There are a number of responsibilities that you undertake as the operator of a small business, and the following items are meant to identify some of these issues:
Requirement to collect and remit sales tax for the State of Ohio.
Certain types of businesses are required by law to collect and remit sales taxes in the State of Ohio. These taxes are collected on top of what you charge a customer to purchase a product or service. The collection of sales taxes requires that you purchase a vendor's license from the Auditor's Office. There are a number of different frequencies which you can choose to report and send your sales tax monies to the state, including Semi-Annual, Quarterly and monthly. Presently, the sales tax rate in Tuscarawas County is
6.5%. The initial cost of a vendor's license is
$25. If you move your business location, you are also required to end your old license and obtain a new license.
Obtaining a Federal Employer Identification Number (Form SS-4)
Businesses are required to obtain an Employer Identification Number (or EIN) from the IRS. This number is used to track reporting of the business entity. The form with which to file and obtain the number is IRS Form SS-4 (a copy of the form is provided in the appendix to this Guide). You can call the IRS and obtain the number over the phone after filling out the form as long as you agree to mail the form to the IRS within 24 hours of speaking to them. Entities other than sole proprietors must have an identification number. Sole proprietors who pay payroll taxes or issue information returns to the IRS must also have an employer identification number in addition to their social security number.
Timely filing of Returns.
While the notion of filing returns on time may seem a bit trivial, it is important to identify what returns you need to file and by what dates. A non-inclusive list of returns required to be filed and there due dates is included in this Guide. A business professional can help you identify the returns which apply to your business. Tax agencies are often mandated to impose penalties (and interest if there is a payment due) when a return is not timely filed. Secondarily, returns which require a payment are usually not considered to be filed timely unless the full payment is received with the return. Filing on time can become critical in saving money as it stops the imposition of penalties, not to mention the costs to reconstruct the returns in time and/or professional fees.
Setting up an accounting system & filing payroll taxes, W-2's and 1099-MISC's.
If you will be paying payroll or if you will be paying vendors who are unincorporated, it is imperative that you get your accounting system set up to be able to handle the gathering of information required to report. The manner and items in the accounting system is a matter for you to resolve with a professional. However, payroll requires that certain taxes be deposited in different frequencies, such as daily, monthly, quarterly or semi-annually and annually. The reporting of payroll usually requires quarterly and/or semi-annual returns as well as the issuance of W-2's at year-end. Payments made for services to unincorporated vendors are also required to be totaled and forwarded to the IRS on Form 1099-MISC.