JK Harris Points out the Do's and Don'ts of Operating a Business

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There are several things to consider when starting and operating your own business, especially when it comes to tax issues.

Bill Lawitzke of JK Harris Small Business Services, LLC, reports there are a lot of things to take into consideration when starting and operating a business.

Perhaps the most important thing to remember is to open and maintain a business bank account.

"Have a separate business bank account so that your personal and business funds are not commingled," said Lawitzke, who has been with JK Harris SBS for four years, as well as being an Enrolled Agent. "This account should have only your business transactions running through it."

Lawitzke also recommends obtaining a business license within the town, county or jurisdiction the business is located when required.

One of the things the IRS recommends is to get an Employee Identification Number (EIN), especially if you have employees; file employment tax returns; or withhold taxes on income, other than wages, paid to a non-resident alien.

One of the keys to operating a successful business with little or no tax issues is good record keeping, which again ties in with having a separate business bank account.

"Keep accurate records," said Lawitzke. "Pay with a debit or credit card so you have a receipt of the transaction. If you pay with cash, get a proper receipt with a legitimate vendor's name on it. Keep a business mileage log. For business lunches, keep a list of the persons you were with and the purpose of the meeting."

Lawitzke also said one of the biggest mistakes made by business owners is not filing the required tax forms and not paying the quarterly Estimated Tax Payments.

"Paying your quarterly Estimated Tax Payments will relieve you of a failure to file Estimated Tax Payments and underpayment penalties," Lawitzke said. "And you need to file W-2s or 1099s."

Lawitzke said if your business pays more than $600 a year to anyone that is not classified as a corporation, that you must file 1099s. You must also file 1099s for your landlord if you pay rent for office space, and your CPA or accountant if you have them doing your bookkeeping, just to name a few.

Owning and operating a business, unfortunately, isn't for everyone. What most people don't realize is that closing a business means more than just closing the doors.

"The IRS expects you to file your Forms 940 and 941 until you check the box that states this is your final return," Lawitzke said. "Closing a business properly prevents future headaches."

You must also make your final Federal tax deposits, report information from any W-2s and/or 1099s issued, and report capital gains or losses, among other things.

For more information about starting, operating and closing a business, go to http://www.irs.gov.

About JK Harris Small Business Services:
JK Harris Small Business Services, LLC, (http://www.jkharrisbusinessadvisors.com) based in North Charleston, S.C., assists small businesses with accounting, bookkeeping and tax preparation services. The firm is affiliated with the JK Harris family of companies, which together, comprise the nation's largest organizations specializing in tax resolution and debt management issues.

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