Decide Which Type of Business Entity to Form

Sole Proprietorship
Partnership
Corporation
S Corporation
Limited Liability Company


Select Your Accounting Period

Calendar Year
12 consecutive months beginning January 1 and ending December 31.

Fiscal Year
12 consecutive months ending on the last day of any month other than December.


Select Your Accounting Method

Cash Method
Income is reported when received & expenses are recorded when paid.

Accrual Method
Income is reported when earned & expenses are recorded when incurred.


Register With Tax & Government Authorities

Internal Revenue Service
Employer Identification Number is required when you:
  • Have employees
  • Have a qualified plan
  • Incorporate your business
  • Start a partnership
  • File employment tax returns
To obtain an Employer Identification Number, complete IRS Form SS-4, Application for Employer Identification Number

File Form SS-4 by mail, by telephone, or by fax.
Address (IL): Kansas City, MO 64999
Telephone (IL): (816) 926-5999
Fax (IL): (816) 926-7988


State & Local Tax Agencies
State Employer Identification Number
  • Some states require an employer to obtain a state employer identification number, Illinois does not issue one.
  • If you have employees who are subject to Illinois Withholding Tax, complete Form NUC-1, Illinois Business Registration.
Obtain the form from the Illinois Department of Revenue, Central Registration Division.

Address : PO Box 19030
Springfield, IL 62794-9030
Telephone : (217) 785-3707


  • State Employment Security Account Number is required when you have employees. Illinois employers should contact the IL Dept of Employment Security to obtain Form UI-1, Report to Determine Liability Under the Unemployment Insurance Act.
Address : 401 S State Street, 4th Floor
Chicago, IL 60605-1225
Telephone : (312) 793-4880



Business Licenses
  • Obtain any necessary applications from the city where your business is located.
  • File form with the required fee with the City.
  • Post in plain sight at your place of business.
  • Must be renewed periodically.


Fictitious Business Name
  • Required if the entity will conduct business in a name other than the name of the corporation or owner(s).
  • Obtain the application from the County where your business is located.
  • File form with the required fee with the County.
  • Post in plain sight at your place of business.


Sales Tax & Reseller Registration
  • Required if you will be engaged in wholesale or retail sales.
  • Obtain Form NUC-1, IL Business Registration, from the IL Department of Revenue, Central Registration Division.
    Address : PO Box 19030
    Springfield, IL 62794-9030
    Telephone : (217) 785-3707
  • File form with the Illinois Department of Revenue.
  • Post in plain sight at your place of business.


Obtain Insurance Coverage

You might consider obtaining the following coverages:
  • Liability
  • Theft
  • Fire
  • Malpractice
  • Employee Fidelity Bond
  • Umbrella
  • Workman's Compensation
    (This is the only insurance coverage that is required by law if you have employees. This provides coverage to employees who are injured while on the job. Consult with your insurance agent regarding obtaining this coverage.)


Keep Good Records

Open a Business Bank Account
  • This is your basic source of information for recording your business receipts & expenses.
  • This account should be kept separate from your personal account.
  • It should be reconciled monthly.


Good Record Keeping
  • Will help you keep a good score sheet of your business.
  • Will help you prepare accurate financial statements.
  • Records that support an item of income or deduction on a tax return must be kept until the statute of limitations expires.


Report & Pay Income Taxes

Sole Proprietorships
Forms to file to report income & expenses:
  • Schedule C (Form 1040), Profit or Loss From Business, for businesses other than farming.
  • Schedule F (Form 1040), Profit or Loss From Farming.


Partnerships
Forms to file to report income & expenses:
  • Form 1065, U.S. Partnership Return of Income, for federal.
  • Form IL-1065, IL Partnership Replacement Tax Return, for Illinois.


Corporations
Forms to file to report income & expenses:
  • Form 1120, U.S. Corporation Income Tax Return, for federal.
  • Form IL-1120, IL Corporation Income & Replacement Tax Return, for Illinois


S Corporations
Forms to file to report income & expenses:
  • Form 2553, Election by a Small Business Corporation, needs to be filed with the Internal Revenue Service within the first 75 days of the corporation's tax year if your corporation wishes to be treated as an S Corporation.
  • Form 1120S, U.S. Income Tax Return for an S Corporation, for federal.
  • Form IL-1120-ST, IL Small Business Corporation Replacement Tax Return, for Illinois.


Limited Liability Company (LLC)
Forms to file to report income & expenses:
  • By default, an LLC is taxed as a partnership. Therefore, it would file the corresponding partnership tax returns.
  • If your LLC elects to be taxed as a corporation, it would need to complete & file Form 8832, Entity Classification Election, on which the election is made and would file the corresponding corporate tax returns.


Report & Pay Employment Taxes

Employment Tax Forms
Form I-9 - Employment Eligibility Verification
  • Both the employer & the employee must complete this Immigration & Naturalization Service Form. This is to verify that each new employee is legally eligible to work in the U.S.
Form W-4 - Employee's Withholding Allowance
  • Completed by the employee
  • Used by the employer to figure the amount of income tax to withhold from the employee's wages.
Form 8109 - Federal Tax Deposit Coupon
  • Is used by certain businesses for depositing taxes.
Form W-2 - Wage & Tax Statement
  • Is used to report wages paid and withholding to employees
Form 940 - Employer's Quarterly Federal Tax Return
  • Is used to report federal unemployment tax
Form 941 - Employer's Quarterly Federal Tax Return

State related employment tax returns


Where to Go for Help

Smith & Associates, Ltd. Tax Calendar

Qualified & Competent Professionals


IRS Publications
15 Circular E, Employer's Tax Guide
17 Federal Income Tax For Individuals
334 Tax Guide for Small Business
583 Starting a Business & Keeping Records
1779 Employee or Independent Contractor


Government Agencies
(800) TAX-1040 Internal Revenue Service Taxpayer Assistance Line
(800) TAX-FORM Internal Revenue Service Ordering Forms & Publications
(800) 732-8866 Illinois Department of Revenue Taxpayer Assistance Line
(800) 356-6302 Illinois Department of Revenue Forms Order Line
(312) 793-4880 Illinois Dept of Employment Security Forms & Help Line
(800) 8ASK-SBA Small Business Administration Small Business Answer Desk
(800) 772-1213 Social Security Administration


Web Sites
www.irs.ustreas.gov (Internal Revenue Service)
www.revenue.state.il.us (IL Department of Revenue)
www.ssa.gov (Social Security Administration)
www.business.gov (US Business Advisor)


Contact Smith & Associates, Ltd. at (312) 444-1776 for a free New Business Booklet.



Smith & Associates, Ltd.
20 North Wacker Drive, Suite 1700
Chicago, Illinois 60606-2904
Phone: (312) 444-1776
Fax: (312) 236-5828
info@cpasmith.com

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