Concept, structure, name... What next? Taxing Issues!

You have your concept, you've thought about your tax structure and you know what type of entity it is you want to form and have reserved the company name with the Secretary of State. Now, you say, what's next...

So far things have flowed pretty easily, or have you forgotten something... It is easy to get so involved in the start-up details that you completely forget about what to expect when you have that first sale.

At least that is where I was at. I was so focused on my visibility on the web that I completely forgot about the basic function of accounting. I was not 100% certain that I would ever get anyone to look at my site let alone make that first sale. You will make that first sale... Believe me...

You will need a bank account and an EIN number (employer identification number) for tax purposes. Sole proprietors can use their social security number as a tax identifier, but I would suggest applying for an EIN to avoid co-mingling your money with your company's. In the long run, it will make your year end accounting less painful. You can find out about EIN numbers by following this link to the IRS website: http://www.irs.gov/businesses/small/article/0,,id=98350,00.html . The IRS also has a fill-able SS-4 Form that you can fill out and file in a matter of minutes to retrieve your EIN number.

You will need this EIN number for your bank account and tax filings. You will need to specify whether or not you intend to have employees on your EIN application. They will also ask your intended business start date and how you are to be taxed (S-Corp, C-Corp, Partnership or as a disregarded entity -sole proprietor). The Department of Revenue will be notified by the information you provide on the EIN application as to employees and will contact you by mail with their tax and filing requirements. You should take the initiative and be ahead of the game by contacting them first. They will give you an indication as to how they would assess your employer situation. Follow this link to the Illinois Department of Revenue website: http://www.revenue.state.il.us/ElectronicServices/Businesses/index.htm.

The Illinois Department of Employment Security is another taxing body that you will need to get your head around if you are going to have employees. I found this pamphlet from IDES to be a useful informational tool: http://www.ides.state.il.us/pdf/employers/FastFacts.pdf. Lastly, check with your local municipality to see what their requirements are. The City of Chicago makes everyone jump through a multitude of hoops, some local villages and townships do the same, either way, you should ask what is required whether you have a brick and mortar business or an on-line business.

Illinois Registered Agent, Inc.