The Ultimate Tax Checklist For Starting A Small Business

ultimate tax checklist for starting a small business

Are you starting a small business? Congratulations! It’s an exciting venture, but it won’t be successful unless you have the right taxes in place. I’ve created the ultimate tax checklist for starting a small business to ensure your success. 

This guide will cover the necessary information that will help keep you organized and compliant with local and federal regulations. With this checklist by your side, you can focus on running your new business without worrying about any potential pitfalls.

Business Structure

Choosing the right business structure is like picking out a good pair of shoes; you have to make sure it fits properly and won’t cause discomfort. The most common entities are sole proprietorships, limited liability companies (LLC), S-corporations, C-corporation, or partnerships. The simplest and least expensive is sole proprietorship because you can operate without employees and don’t need personal protection from business liabilities.

  • An LLC offers more flexibility than other entities in terms of management and taxation, making it a popular choice for small businesses with multiple owners. 
  • In contrast, an S Corporation provides pass-through taxation but has restrictions on ownership that may not be suitable for all businesses. 
  • C-Corporations provide investors with significant ownership protections but generally require double taxation – once at the corporate level before profits are distributed to shareholders. 
  • Lastly, partnerships allow two or more people to share responsibilities and profits while receiving pass-through tax treatment. 

As such, each entity type has advantages and drawbacks, depending on your specific circumstances. Knowing which best suits your needs is essential when setting up your business. With careful consideration of the options available, transitioning into the next step should be seamless.

Tax Checklist:


Licensing Requirements

When starting a small business, you must be aware of various licensing requirements. Depending on your niche, you may need to gather several licenses and permits for compliance with local regulations. Make sure to consider these factors:

1. Business License – A business license is necessary for most businesses and can provide legal protection from potential liabilities. It will also help you comply with any applicable state laws or regulations.

2. Permit Requirements – You may need additional permits, such as food service permits if you plan on selling food products or liquor licenses. This is required if you’re planning to serve alcohol at your establishment.

3. Registration Requirements – Certain types of businesses, like those that involve investment activities, may require registration with certain governmental agencies to conduct their operations legally.

4. Compliance Regulations – Depending on your, there may be other compliance requirements.

All licensing requirements must be addressed before operating your business so that you don’t run into any problems down the road. Remember, compliance with tax regulations will save you time and money and could prevent costly fines or penalties.

Tax Identification Number

When starting a small business, securing a Tax Identification Number is essential. It’s the lifeblood of your new business venture – without it, you won’t be able to do anything related to taxes! Obtaining a tax id number involves registering with federal and state government authorities, depending on the nature of your business. 

  • But first, you need to apply for a Federal Tax ID with Employer Identification Number.
  • Before registering with any other authority, you’ll need this, so get it out of the way first.
  • Be sure to complete all necessary paperwork correctly; mistakes are common and can cause delays. 
  • After that, if you’re operating in certain states, you may also need to apply for State Tax IDs from those jurisdictions too.

Fortunately, there’s plenty of assistance available. Probably, a good place to start is to talk with a reputable tax advisor or consultant. They can guide you through the entire process to make sure your transaction goes smoothly. They can answer any questions about registration and even provide templates for completing applications accurately and quickly. 

With their expertise on your side, navigating this crucial part of setting up shop should be stress-free!

Record-Keeping System

Woman in white t-shirt holding smartphone in front of laptop

An effective record-keeping system is essential for small businesses. Business records are necessary to help track expenses, sales, and other financial transactions that can be used when filing taxes. It is important to keep accurate and organized records throughout the year for your tax preparation process to run smoothly.

The type of organizational system you choose will depend on your business’s needs. There are both paper-based and electronic record-keeping systems available that offer advantages over traditional methods. Paper-based systems allow easy access to documents while providing an audit trail of all financial activities. 

Electronic record-keeping offers fast retrieval of data with less time spent organizing files manually. Digital tools provide greater security against fraud or theft as they require authentication before allowing access. Whichever method you choose, it should be implemented early on in your business operations so that all financial activity is tracked properly from the beginning. 

This will make tax season easier by ensuring everything is accurately recorded and easily retrievable when needed. Adopting a consistent and reliable record-keeping system now will save time and money when preparing taxes each year. No matter how comprehensive a system you put into place, professional advice may still be required during certain stages of the process due to changing regulations or complexities related to filing requirements.

Professional Advice

When starting, small business owners need to get the right tax and legal advice. A great example of this occurred with a client who owned a cafe. They sought legal advice about their lease agreement before anything else was signed off on or finalized. 

This allowed them to ensure they were well protected from any potential risks associated with leasing property as a business owner. It is always best to seek professional advice early on so that your taxes are handled correctly throughout the year. Professional tax advisors can answer any questions regarding deductions, filing deadlines, and other topics related to running a small business. 

Having the right information can save you time and money by ensuring your taxes are filed properly. Getting good quality small business advice isn’t just limited to taxes; having access to reliable resources such as accountants, solicitors, financial planners, and insurance brokers can also help reduce stress levels and give peace of mind knowing that everything is being handled accurately and efficiently. With all these professionals at your disposal, there won’t be much guesswork when deciding how best to manage finances or plan for future growth within your business.


Starting a small business is exciting and rewarding, but success requires careful planning and attention to detail. This is especially true with tax compliance. By following the ultimate tax checklist outlined in this blog, small business owners can ensure that they have all their bases covered when it comes to taxes, from registering for a tax ID number to filing accurate and timely tax returns.

However, tax compliance is only one part of a successful business strategy. Small business owners should also develop a comprehensive tax strategy considering their unique circumstances, such as their business structure, industry, and goals. Working with a tax professional will help small business owners develop a tax strategy that minimizes their tax liability and helps them achieve their business goals.

So, don’t wait until tax season to think about your tax strategy. Take action and contact us today and develop a comprehensive tax plan with Biz Tax Strategy to help you achieve your business objectives and keep more of your hard-earned profits. Your business’s financial success depends on it.