When you own a small business, you’re only sure of two things; your business is your passion, and you want to keep its doors open. To keep your company running, you have to follow the rules.
At CSI Accounting & Payroll, we’ve helped keep thousands of businesses in compliance for over 50 years. However, we can only offer guidance and suggestions. Ultimately, staying in compliance is your responsibility. How do you do that?
This article will guide you through the essential steps to meet all of the requirements at these levels:
- Federal
- State
- Local
Federal Compliance
On a federal level, there are quite a few things you need to do to keep your business in compliance.
Business Structure
You should know how your business is legally structured and make sure you follow the requirements for your structure. For example, if your business is an S-Corp, you should have a reasonable payroll.
To do this, a legal professional or accountant can help you choose the right business structure or examine whether your current one is still the best for you. We recommend checking your structure annually or whenever you hit a major milestone - whatever that looks like for your business.
Responding to Letters From the IRS
Every business is subject to getting letters from the federal government. If you receive a letter from the IRS, open it immediately and follow the directions inside. There may be a deadline written in the letter. If you have questions about what to do, an accountant can help you.
Federal Tax Filings
On the IRS website, make sure you complete and pay your annual federal tax filings on time.
Depending on your business, you can either keep detailed records of your income, expenses, and deductions on your accounting software, or you can work with an accountant.
Personal Taxes
If you’re a sole proprietor or own a pass-through entity (S-Corp or partnership), then your personal taxes can be intertwined with your business.
To manage this, you can work with an accountant to make quarterly estimated tax payments to cover your personal tax liability. You’ll also need to file an annual tax return. If you don’t handle your personal taxes that are tied to your business, you can have your licenses suspended.
Heavy Use Tax for DOT Trucks
If your company uses heavy vehicles like buses or big rigs, you need to submit annual Heavy Use Tax (Form 2290) payments to the IRS - either online or with the help of an accountant.
The Heavy Use Tax is due the month in which you purchased the vehicle each year if the vehicle has a taxable gross weight of 55,000 pounds or more.
Federal Licensing
You have to maintain any licenses and permits that are required for your business to operate.
Because there are so many possible licenses and permits, it’s hard to line them all up here. We recommend working with an accountant to review the licensing required for your business’s unique situation. You should also be aware of when you need to renew them.
State Compliance
On a state level, there are also many things you need to do to keep your business in compliance.
Collecting and Remitting Sales and Use Tax
Check with your state’s Department of Revenue to see if your business is subject to sales tax. If it is, you need to register for a sales tax permit, collect sales tax from customers, and file regular sales tax returns.
Each time you have a new product or service you’re selling, you should check if it’s also subject to sales tax.
Responding to Letters From the State
Every business is subject to getting letters from their state government. If you receive a letter from your state, open it immediately and follow the directions inside. There may be a deadline written in the letter. If you have questions about what to do, an accountant can help you.
Renewing with Secretary of State
You need to renew your business registration with the Secretary of State annually. If you do business in multiple states, you have to renew with each relevant state.
Some states have you file at the end of each calendar year, while others have you do it for the month that you signed up each year. You should regularly check your registration status for each relevant state to make sure you renew all of your registrations on time. Otherwise, you could face penalties or business interruptions.
State Tax Filings
On your state’s Department of Revenue website, make sure you complete and pay your annual state tax filings on time.
Depending on your business, you can either keep detailed records of your income, expenses, and deductions on your accounting software, or you can work with an accountant.
Personal Taxes
If you’re a sole proprietor or own a pass-through entity (S-Corp or partnership), then your personal taxes can be intertwined with your business.
To manage this, you can work with an accountant to make quarterly estimated tax payments to cover your personal tax liability. You’ll also need to file an annual tax return. If you don’t handle your personal taxes that are tied to your business, you can have your licenses suspended.
State Licensing
You have to maintain any licenses and permits that are required for your business to operate in your state. States require ones for construction, nursing, home healthcare, restaurants, and more.
Because there are so many possible licenses and permits, it’s hard to line them all up here. However, by looking at your state’s industry departments, you can research licensing that may apply to the industry you operate in.
We recommend working with an accountant to review the licensing required for your business’s unique situation. You should also be aware of when you need to renew them.
Business Personal Property Tax Filings
Your state has annual (although the time of year they’re due varies by state) business personal property taxes that must be reported and paid if applicable. If you’re not sure, an accountant can help you. Make sure you keep records of your business’s personal property.
Provider Tax
This state tax usually applies to services that are not subject to sales tax, such as healthcare. The state should tell you if you’re subject to provider tax. Otherwise, you can check with your industry’s department - such as the Department of Health.
You’ll be audited if you file a return without provider tax if you’re supposed to have it. To pay your provider tax, it’s on your annual tax return through the state. You can also choose to pay quarterly estimates on it to avoid penalties and interest.
Local Compliance
Don’t forget that some local areas can enforce their own rules for small businesses, especially when it comes to taxes and licensing.
Local Taxes
There may be some local taxes, such as real estate taxes, that apply to your business. A local accountant can help you figure out if any local laws apply to your business, as well as what you need to do about them to stay in compliance.
Local Licensing
You have to maintain any licenses and permits that are required for your business to operate in your local area.
Because there are so many possible licenses and permits, it’s hard to line them all up here. However, a local accountant can review the licensing required for your business’s unique situation. You should also be aware of when you need to renew them.
Get Compliance Advice From an Expert
Ultimately, staying in compliance is up to you. However, now that you know about how an accountant can help you navigate various federal, state, and local business requirements, are you ready to check out monthly accounting services?
If so, please consider CSI Accounting & Payroll! Find peace of mind in being able to focus on running and growing your business - and leave the compliance up to us. To see if we can be a good fit for your business, click the button below for a free consultation:
Not ready to talk? That’s okay! First, learn more about whether monthly accounting or annual accounting is better for your business.
