How to Deal with Regulations and Taxes in Your Business Plan

Because preparing for the inevitable is a crucial part of business planning, your new venture is to address all tax liabilities and regulatory requirements. Ben Franklin quipped that death and taxes are the only certainties in life. These days, he may have added regulations. You first need to know what those requirements are for your particular enterprise.

Doing so isn’t always easy. Business taxes vary widely from country to country, of course. In the United States, the federal government, your state government, and in some cases your local government, such as your county or city government, may levy business taxes. Your businesses tax liabilities depend in part on the business structure you choose.

For small businesses and sole proprietors, for example, the federal government levies four basic kinds of business taxes:

  • Income tax: Money owed to the feds based on an individual’s income after deductions

  • Self-employment tax: A Social Security and Medicare tax primarily for individuals who work for themselves

  • Employer taxes: Taxes that employers are required to withhold from employee wages, including Social Security and Medicare

  • Excise taxes: Taxes paid on the purchase of certain goods or services, such as gasoline or highway usage

If you’re part of a large company, chances are you have tax accountants who know this stuff backward and forward. If you’re just starting out as a sole proprietor or small business, a good place to start getting information is at the Small Business Administration. The Internal Revenue Service also provides detailed information about business taxes.

Almost every state in the United States levies business taxes. Check your state government for details.

Regulations, such as tax liabilities, widely vary, depending on the type of business you’re setting up and where you plan to do business. A physician going into business on her own must meet very different regulations than a restaurateur, for instance. Some kinds of businesses must be accredited. Others require you to meet environmental regulations.

Regulatory requirements for businesses vary so much, in fact, that checking with the Small Business Administration is a must, your state government’s business development office, your county or city government, and the local Chamber of Commerce for more information. If the regulatory landscape looks especially daunting, consider hiring a lawyer to help you navigate.

If you’re planning a business that must meet crucial regulations in order to operate, your plan should list the applicable regulations and include important details about what you’ll need to do to meet them.

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