When starting a new business in Nevada, there are a number of issues that must be taken into account. Some of the most important of these are tax considerations, as these can have a substantial impact on the profitability of a business.
According to the Internal Revenue Service, one of the first steps that entrepreneurs should take is determine what type of business entity will fit their needs the best. This is a very important decision because it will have substantial tax consequences and dictate which tax return forms must be filed.
The U.S. Small Business Administration explains that there are six general categories of business structures: sole proprietorships, limited liability companies, cooperatives, corporations, partnerships and S corporations. Each of these carries its own benefits and disadvantages, and business owners must determine which of these will work best with their strategic goals. In addition to tax considerations, common deciding factors include ease of formation, the personal liability of the owners and the documents required for formation.
Some of the taxes a business owner may be responsible for are:
- Income taxes, which are paid as a business receives income
- Self-employment taxes, which are contributions toward Medicare and Social Security
- Estimated taxes, which are regular payments made throughout the year to cover income and self-employment taxes
- Employment taxes, which are payments made for employees’ Social Security, Medicare, federal income tax withholding and federal unemployment coverage
- Excise taxes, which apply to certain types of business activities
It is important to thoroughly understand the requirements of any business type, as the failure to make timely and accurate payments may result in serious penalties.