The federal government probably takes the largest share of your profits through taxes, and, depending on the revenue needs of the state in which you conduct your business, the state government can also keep an amount of your income through taxes. Local tax authorities, city or county, may not be too far behind. Because your business will probably not be large enough to have a tax department, you must develop your bookkeeping and accounting systems in a way that your tax liabilities are calculated, documented and met. You must also find ways to keep up with the changes in the tax laws that may affect your business.
Some states also levy taxes on business property and inventory.
Your state will automatically send you the necessary forms when you register the business. Listed below are a few of the tax obligations that are placed on businesses. For more information, contact your IRS office. If you have employees, you must withhold and pay employment taxes, no matter what form of business organization you use. You must first obtain a federal employer identification number by filing Form SS-4.