Jack A. Coleman Jr.
Certified Public
Accountant
903-723-6064
Starting a
New Business
General
Recommendations for Setting Up Your Business
All these
elements should be addressed in your BUSINESS PLAN
·
Organization
o
Consult
with your lawyer for advice and creation of a
o
Complete
a request for Taxpayer Identification Number, Form SS-4 online at www.irs.gov. A number will be assigned online and a CP-575
letter issued as an online document.
IMPORTANT: Save the pdf file and
print extra copies! The CP-575 letter is
the equivalent to a social security card.
It is frequently requested as proof of identity. Retain it as a permanent business document in
a safe place.
o
Open
a bank account (minimum opening deposit of $1,000 to comply with minimum
capitalization requirements). This
cannot be done without the corporation showing up as a registered entity in the
Texas Secretary of State’s website and the IRS-issued Taxpayer Identification
Number Assignment Letter, Form CP-575.
Don’t order checks from the bank if you plan to use QuickBooks. You will need voucher checks to avoid
duplication of bookkeeping work.
o
Consider
the election to be treated as a small business (S) corporation. File IRS form 1023 to make this
election. The form is available at www.irs.gov
LLCs cannot make this election unless there is an entity classification
election to be treated as a corporation for tax purposes (IRS form 8832) made
in advance of the S election.
·
Business
or Occupational Licenses and Taxes
o
Some
business occupations require licensing and the payment of occupational taxes or
fees. Discuss these requirements with
your attorney, accountant, or the appropriate licensing agency.
·
Accounting
Controls
o
Accounting
Controls should be a consideration from the onset of developing the
business.
o
Any
good accounting control system will be designed to do four basic things:
1. Protect assets to make sure that the
inventory, equipment, computers, buildings, and cash of the business are used as
the owner(s) intended.
2. Produce reliable accounting information
to make certain that the accounting and business information systems provide the
owner with information which can be trusted and relied upon.
3. Promote efficient operations to help
the owner and the employees make the best use of time, money, information, and
the other resources of the business.
4. Require adherence to company
policies to make it difficult to “beat the system” by not following the owner’s
rules and directions for running the business.
Basic Tools to Set Up A System Of Accounting Control
o
Establish
responsibilities
o
Maintain
adequate records
o
Insure
assets and bond key employees
o
Separate
recordkeeping from custody of assets
o
Divide
responsibility for related transactions
o
Apply
technological controls
o Perform regular, independent reviews or audits of the information contained in the financial records.
Remember: The more
removed the owner of a business is from its operations, the greater the need
for accounting controls and the ability to acquire independent verification of
information contained in financial records.
If something does not fit the expected pattern, then ask for an
explanation. If the explanation is logical and reasonable, leave it alone. If
the explanation is not logical or reasonable, then investigate further. Further
investigation will confirm the logic or reasonableness of the information or point
to the need for more detailed information.
·
Bookkeeping
o
Use
QuickBooks!
o
Create
the simplest chart of accounts as possible modeled after the tax reporting form
requirements. Modify the accounting
system once specific information requirements are identified.
o
Use
pre-printed voucher checks. Manually
preparing checks and later entering them in QuickBooks doubles the work and the
chances for error.
o
Use
pre-printed deposit slips
o
Automate
as many payments as possible.
o
The
officers and directors of a corporation are responsible for ensuring the
corporation’s accounting practices are maintained in a proper and timely
fashion.
·
Payroll
o
Pay
“reasonable” salaries
o
Payroll
tax filing and deposit requirements may be found in IRS Publication 15 or on
the IRS website. Make payroll deposits via EFTPS www.eftps.gov The EFTPS application may be completed
online.
o
File
quarterly reports.
o File a Texas Workforce Commission
Status Report with your first quarterly report.
File the first report with the Tyler or Longview Field Offices. File all future reports online via the Texas
Workforce Commission website.
o Warning: The 100% penalty. If your business fails to pay over withheld
taxes, the persons responsible for payment of such taxes or those with the
capacity to cause the payments may be held personally liable. This includes officers, managers, bookkeeper,
or any person whose name appears on the bank signature card. Pay your payroll taxes on time, every time!
General Disclaimer: This web document does not represent the
consulting work product of an accountant or attorney. The information in this
document is a generalization of the processes relating to the creation of a new
business entity. The organizational
type, entity form, and filing requirements vary among the different options
available. Consult with your attorney
and certified public accountant before making decisions relating to entity
form, regulatory requirements, tax elections, and other requirements IN ADVANCE of making any filings with
any governmental agency.