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Business formation and tax considerations in New Jersey

For people in New Jersey that are starting a new business, it can be both an exciting and frustrating time. Many people are just anxious to get started, but are forced to slow down and deal with all of the issues that surround business formation. One of those issues that must be dealt with is taxes.

There are so many things to consider when choosing a business type. Important questions include how many employees there will be, how the business will be owned and what number of people will be principals. However, one of the biggest considerations when it comes to business type is how the IRS will treat that business for tax purposes.

Depending on whether the business is a corporation, sole proprietorship, limited liability company or partnership, there will be different forms and tax considerations for the business. It may be beneficial to have a thorough understanding of what the tax ramifications are for each entity type before choosing one. After all, the goal is to pay as little in taxes as possible.

With the right information and assistance in choosing an entity type, business formation doesn't have to be complicated and frustrating. Having to pay taxes is a necessary evil for everyone in New Jersey, and choosing the right structure, keeping good records and having the right accounting method can be crucial to filing taxes. The more thought put into these issues up front, the less they may cause frustration and consternation later. It may be possible to undo the wrong choice later, but it could end up being more costly than doing things right from the beginning.

Source: The Redding Pilot, "Tax tips if you're starting a business," Dianne Besunder, July 9, 2013

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