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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 ...

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