Decide Which Type of Business Entity to Form Sole Proprietorship Partnership Corporation S Corporation Limited Liability Company Select Your Accounting Period Calendar Year 12 consecutive months beginning January 1 and ending December 31. Fiscal Year 12 consecutive months ending on the last day of any month other than December. Select Your Accounting Method Cash Method Income is reported when received & expenses are recorded when paid. Accrual Method Income is reported when earned & expenses are recorded when incurred. Register With Tax & Government Authorities Internal Revenue Service Employer Identification Number is required when you: Have employees Have a qualified plan Incorporate your business Start a partnership File employment tax returns To obtain an Employer Identification Number, complete IRS Form SS-4, Application for Employer Identification Number File Form SS-4 by mail, by telephone, or by fax. Address (IL): Kansas City, MO 64999 Telephone (IL): (816) 926-5999 Fax (IL): (816) 926-7988 State & Local Tax Agencies State Employer Identification Number Some states require an employer to obtain a state employer identification number, Illinois does not issue one. If you have employees who are subject to Illinois Withholding Tax, complete Form NUC-1, Illinois Business Registration. Obtain the form from the Illinois Department of Revenue, Central Registration Division. Address : PO Box 19030 Springfield, IL 62794-9030 Telephone : (217) 785-3707 State Employment Security Account Number is required when you have employees. Illinois employers should contact the IL Dept of Employment Security to obtain Form UI-1, Report to Determine Liability Under the Unemployment Insurance Act. Address : 401 S State Street, 4th Floor Chicago, IL 60605-1225 Telephone : (312) 793-4880 Business Licenses Obtain any necessary applications from the city where your business is located. File form with the required fee with the City. Post in plain sight at your place of business. Must be renewed periodically. Fictitious Business Name Required if the entity will conduct business in a name other than the name of the corporation or owner(s). Obtain the application from the County where your business is located. File form with the required fee with the County. Post in plain sight at your place of business. Sales Tax & Reseller Registration Required if you will be engaged in wholesale or retail sales. Obtain Form NUC-1, IL Business Registration, from the IL Department of Revenue, Central Registration Division. Address : PO Box 19030 Springfield, IL 62794-9030 Telephone : (217) 785-3707 File form with the Illinois Department of Revenue. Post in plain sight at your place of business. Obtain Insurance Coverage You might consider obtaining the following coverages: Liability Theft Fire Malpractice Employee Fidelity Bond Umbrella Workman's Compensation (This is the only insurance coverage that is required by law if you have employees. This provides coverage to employees who are injured while on the job. Consult with your insurance agent regarding obtaining this coverage.) Keep Good Records Open a Business Bank Account This is your basic source of information for recording your business receipts & expenses. This account should be kept separate from your personal account. It should be reconciled monthly. Good Record Keeping Will help you keep a good score sheet of your business. Will help you prepare accurate financial statements. Records that support an item of income or deduction on a tax return must be kept until the statute of limitations expires. Report & Pay Income Taxes Sole Proprietorships Forms to file to report income & expenses: Schedule C (Form 1040), Profit or Loss From Business, for businesses other than farming. Schedule F (Form 1040), Profit or Loss From Farming. Partnerships Forms to file to report income & expenses: Form 1065, U.S. Partnership Return of Income, for federal. Form IL-1065, IL Partnership Replacement Tax Return, for Illinois. Corporations Forms to file to report income & expenses: Form 1120, U.S. Corporation Income Tax Return, for federal. Form IL-1120, IL Corporation Income & Replacement Tax Return, for Illinois S Corporations Forms to file to report income & expenses: Form 2553, Election by a Small Business Corporation, needs to be filed with the Internal Revenue Service within the first 75 days of the corporation's tax year if your corporation wishes to be treated as an S Corporation. Form 1120S, U.S. Income Tax Return for an S Corporation, for federal. Form IL-1120-ST, IL Small Business Corporation Replacement Tax Return, for Illinois. Limited Liability Company (LLC) Forms to file to report income & expenses: By default, an LLC is taxed as a partnership. Therefore, it would file the corresponding partnership tax returns. If your LLC elects to be taxed as a corporation, it would need to complete & file Form 8832, Entity Classification Election, on which the election is made and would file the corresponding corporate tax returns. Report & Pay Employment Taxes Employment Tax Forms Form I-9 - Employment Eligibility Verification Both the employer & the employee must complete this Immigration & Naturalization Service Form. This is to verify that each new employee is legally eligible to work in the U.S. Form W-4 - Employee's Withholding Allowance Completed by the employee Used by the employer to figure the amount of income tax to withhold from the employee's wages. Form 8109 - Federal Tax Deposit Coupon Is used by certain businesses for depositing taxes. Form W-2 - Wage & Tax Statement Is used to report wages paid and withholding to employees Form 940 - Employer's Quarterly Federal Tax Return Is used to report federal unemployment tax Form 941 - Employer's Quarterly Federal Tax Return State related employment tax returns Where to Go for Help Smith & Associates, Ltd. Tax Calendar Qualified & Competent Professionals Certified Public Accountants Attorneys IRS Publications 15 Circular E, Employer's Tax Guide 17 Federal Income Tax For Individuals 334 Tax Guide for Small Business 583 Starting a Business & Keeping Records 1779 Employee or Independent Contractor Government Agencies (800) TAX-1040 Internal Revenue Service Taxpayer Assistance Line (800) TAX-FORM Internal Revenue Service Ordering Forms & Publications (800) 732-8866 Illinois Department of Revenue Taxpayer Assistance Line (800) 356-6302 Illinois Department of Revenue Forms Order Line (312) 793-4880 Illinois Dept of Employment Security Forms & Help Line (800) 8ASK-SBA Small Business Administration Small Business Answer Desk (800) 772-1213 Social Security Administration Web Sites www.irs.ustreas.gov (Internal Revenue Service) www.revenue.state.il.us (IL Department of Revenue) www.ssa.gov (Social Security Administration) www.business.gov (US Business Advisor) Contact Smith & Associates, Ltd. at (312) 444-1776 for a free New Business Booklet. Smith & Associates, Ltd. 20 North Wacker Drive, Suite 1700 Chicago, Illinois 60606-2904 Phone: (312) 444-1776 Fax: (312) 236-5828 info@cpasmith.com ©2000 Smith & Associates, Ltd. All rights reserved.