Tax Strategies for Opening or Closing a Business
Two of the most challenging times of running a business are, perhaps, the start-up and close-down phases. Taxwise, there are certain opportunities that should not be overlooked.
For further information, see IRS Publication 583, Starting a Business and Keeping Records.
Initial Tax Decisions to Make
When you start a business of any kind, whether a full-time or part-time one, you need to make certain choices. Here is a checklist of the elections, choices, and decisions to make when commencing a business (the chapter in which the item is discussed is also noted):
- Type of entity (Chapter 1). Should you incorporate? Form an LLC?
- Tax year (Chapter 2). Should you use a calendar year? A fiscal year (and which fiscal year)?
- Accounting method (Chapter 3). Should you use the cash method? Accrual method? Some other method?
- Investing your own resources. When you add money or property to a start-up, are there any immediate tax results to you? To the business?
- Financing (see below). If you need ...