Your required business tax issues can be complicated and overwhelming. The first thing you must do is consult your tax professional for all tax questions. This article is not intended to be a complete list of required forms. It is an overview of the most frequently required tax forms and issues you may need. First, you must obtain a federal tax ID online at the IRS website, www.irs.gov.

If you have employees, there are certain tax forms that you must file: Form I-9 verifies that each employee is legally eligible to work in the U.S.; Form W-4 is completed by each employee to indicate their withholding tax; Form W-2: is the Wage and Tax Statement you prepare every year for each employee and give copies to employees and file a report with I.R.S; and Form 1099 must be prepared for payments of $600 or more paid to non-employees in one year such as independent contractors. You give copies to the payee and mail a copy to IRS.

There are other tax forms that you may be required to file if you give your employees bonuses or make certain kinds of sales. Form 1099-MISC is required for prizes or awards of $600 or more or for sales of consumer goods for $5,000 or more to a person who intends to sell the goods retail, but does not conduct the sales in a permanent retail establishment. In addition, you are required to file Form 8300 for cash payments you receive in one transaction that are more than $10,000.

The I.R.S. website, www.irs.gov, has many inexpensive small business products that you can order on line. The publications are: Tax Calendar for Small Businesses and Self-Employed, A Virtual Small business Tax Workshop DVD, Small Business Resource Guide CD, Recognizing Illegal Tax Avoidance Schemes Brochure, and Home-Based Business Tax Avoidance Schemes Brochure. There are numerous small business and self-employed resources offered on the I.R.S. website. There are even small business classes and workshops.

As a business entity, you will have to pay income tax and file a Form 1040 or self-employment tax and file Schedule SE (Form 1040). On behalf of your employees, you will have to withhold from salary and pay to IRS and the state federal and state withholding tax. You will be required to withhold from salary and match the amount from the business’ funds to pay social security and medicare tax. You also must pay federal unemployment tax.

If you sell certain kinds of products or engage in certain business activities, you will be required to pay excise tax. If you sell a product, you will have to pay sales tax usually to the city in which you operate. There are numerous schedules that business entities or self-employed persons are required to file with their 1040. One of the most important is Schedule A which itemizes your business deductions.

You may deduct your business expenses which are the cost of operating a business. If you manufacture products or purchase them for resale, you can deduct the cost of goods sold. The I.R.S website explains how to calculate the deductible cost of goods sold. Other types of business deductions are the expense of using your car in business, salaries and payments to independent contractors, your contribution to employees’ retirement plans, rent expense, insurance, and interest on any business loans. There are additional allowable deductions that you can discuss with your tax professional.

Capital expenses are not deductible. You must capitalize, rather than deduct, some capital costs. These costs are a part of your investment in your business. There are generally three types of costs you capitalize: going into business, business assets, and improvements. You cannot deduct personal expenses. If you use your Home for your business, you can deduct a prorata share of the expenses you incur on your home. You must file a Form 8829 stating you home’s total square feet and the percentage of your home used exclusively for business. The Form 8829 instructions explain how to calculate a deduction for your home office.