Dale K. Cline, CPA, PLLC
CERTIFIED PUBLIC ACCOUNTANT
P.O. Box 3966
Suite 101, 1333 2nd St. N.E.
Hickory, NC 28603-3966
GUIDE FOR NEW BUSINESS OWNERS
We have included this information to assist you with the general responsibilities of a new business owner. It is not an all inclusive guide and should not be used as a substitute for professional advice. Each business is unique in its structure and requires constant review of its requirements under federal, state, and local governing agencies.
We will be happy to assist you with obtaining tax ID numbers and with any reporting and filing requirements as needed. Also, we can help you set up financial, payroll, and tax accounting systems. We will be glad to consult with you and your attorney regarding operating agreements, buy-sell agreements, retirement or other fringe benefit plans, etc.
BASIC LICENSES, APPLICATIONS, ETC. FOR A NEW BUSINESS
Employer Identification Number (EIN), also called Federal Identification Number, is required for a Partnership, Corporation, Limited Liability Partnership and Limited Liability Company. Proprietorships & one member limited liability companies with employees are also required to obtain an EIN for reporting/paying payroll taxes. FORM SS-4, Application for Employer Identification Number can be accessed and or filed online at www.irs.gov.
Business Registration Application for Income Tax Withholding, Sales and Use Tax, and Machinery, Equipment, and Manufacturing Fuel Tax. FORM NC-BR can be accessed and or filed online at www.dornc.com.
DES, Division of Employment Security requires all businesses with employees to complete the application process online for an unemployment tax number @ www.des.nc.gov.
North Carolina employers are required to report newly hired, rehired, or those who have returned to work within 20 days of hiring. This is referred to as the New Hire Reporting as established by the U.S. Department of Health and Human Services (DHHS). Online access, go to www.newhire-reporting.com/NC-Newhire/default.aspx.
Workers Compensation Insurance is required when employers have 3 or more employees. Your insurance provider can assist you with this. www.ic.nc.gov.
North Carolina Privilege Licenses may be required and you can access a list of those required to have this license at www.dornc.com/taxes/license. This license has an annual renewal requirement for the period July-June.
A Certificate of Authority may be required for out-of-state corporations to operate in N.C. and or other states. You will need to check with the Secretary of State's office of each state to assure compliance. www.sosnc.gov/corporations.
City/County Privilege Licenses may be required for certain businesses, trades, franchises, or occupations. Annual renewal is for the period July-June. You should check with your local city/county to acquire this license. For the City of Hickory, call (828) 323-7424.
www.catawbacountync.gov/tax. (Call 828-465-8404)
County Business property tax listings are required on business tangible personal property. A business property tax listing is due by January 31 yearly on property in your possession on January 1. (An extension is available if you need more time.)
Corporations are required to file an annual report with the Secretary of State, Corporation Division of N.C. The annual fee is $25.00.
Limited Liability Companies (some exceptions apply) are required to file an annual report with the Secretary of State and pay an annual fee of $200.00. This can be accomplished online by accessing www.sosnc.gov/corporations.
Franchise Tax of $200.00 minimum is required annually when filing corporate tax returns.
A corporation or limited liability company that wants to be taxed as an S-Corporation must file Form 2553 (Election by a Small Business Corporation) within the first 2 1/2 months to be effective for the initial year.
Other state agencies and regulatory boards may require licenses and permits such as zoning, EPA, Department of Motor Vehicles, etc.
Tax Credits Available
WOTC - Work Opportunity Tax Credit www.doleta.gov/business/incentives.
NC - Qualifying businesses for job creation, investment in business property, renewable energy property, and research expenses in technology development can contact the Economic Development Partnership of North Carolina @ www.edpnc.com/relocate-or-expand/incentives.
REQUIRED DOCUMENTS FOR A NEW BUSINESS WITH EMPLOYEES
The employer is responsible for obtaining any and all tax ID numbers with (federal, state, and local) government agencies.
Obtain these documents from each employee and secure them in confidential files:
Form I-9 (U.S. Citizenship and Immigration Services Form).
Form W-4 (Employee's Withholding Allowance Certificate) Employees claiming exemption from Withholding must file a new Form W-4 each year.
State Withholding Allowance Certificate (NC-4 for North Carolina).
Other withholding allowance documents may be needed to substantiate the withholding for items such as insurance payments, 401-K, etc.
EMPLOYER'S RESPONSIBILITIES WHEN PAYING EMPLOYEES
1. Withhold income tax for federal, state, and local (if required), based on withholding certificates.
2. Withhold the employee's share of social security and medicare taxes.
3. Due Date for depositing the taxes (that have been withheld including the employer's portion of social security and medicare taxes) with the respective government agencies depends on your deposit schedule. Your deposit schedule is generally monthly or semiweekly. Monthly Schedule Depositors deposit each month's taxes by the 15th day of the following month; Semiweekly Schedule Depositors deposit the taxes (on wages paid Saturday-Tuesday by the following Friday, taxes on wages paid Wednesday-Friday by the following Wednesday). Next day deposit obligations of $100,000 liability could apply in certain circumstances.
EFTPS (Electronic Federal Tax Payment System) is generally required to deposit the taxes. Failure to use this system could result in a 10% failure to deposit penalty. www.irs.gov/uac/EFTPS or call 1-800-555-4477.
You must inform employees whose wages do not exceed certain levels that they may be eligible to claim a tax refund because of the EIC (Earned Income Tax Credit). Publication 15 and 15-A are excellent guides at www.irs.gov.
Caution: The taxes withheld from the employee's pay are held in trust by the employer. The employer is responsible for collecting, accounting for, and paying over these taxes to the respective government agencies timely and to file the proper reports as required.
Quarterly Filings (Due April 30, July 31, October 31, and January 31)
1. Form 941 & applicable Schedule B (Employer's Quarterly Federal Tax Return) reports the wages, tips, and other compensation along with the federal income tax withheld and the social security and medicare tax responsibilities of the employer.
2. Form NC-5Q (Quarterly Income Tax Withholding Return) or other applicable state form reports the state income tax withheld from employees wages, etc.
3. Form NCUI 101 (Employer's Quarterly Tax and Wage Report) or other applicable state form, reports wages subject to unemployment tax per employee and is used to submit the employer's liability based on the applicable tax rate.
4. Deposit Federal Unemployment Tax (FUTA) that is due if the un-deposited amount is over $500.
Annual Filings (Generally due by January 31)
1. Furnish each employee a Form W-2.
2. Reconcile Forms 941 and State Withholding Forms with W-2s and file Copy A of W-2s with the W-3 transmittal with the Social Security Administration (SSA), and copies of the W-2s with the applicable state transmittal (NC-3 or NC-3M).
3. Form 940 (Employer's Annual Federal Unemployment (FUTA) Tax Return).
4. Form 944 (Employer's Annual Federal Tax Return) instead of Form 941 if qualified.
The Department of the Treasury, Internal Revenue Service Publications 15 and 15-A (Circular E), Employer's Tax Guides, have a wealth of information to assist employers. You can access these publications at www.irs.gov.
OTHER FILING REQUIREMENTS FOR BUSINESSES
Forms 1099 may be due to other payees Form 1099-MISC, Miscellaneous Income along with transmittal document Form 1096 is due annually by January 31. Other forms 1099 may also be due.
Form 945 (Annual Return of Withheld Federal) for any non-payroll income tax withholding, (for example, from pensions or payments subject to backup withholding). You should have a form W-4P (Withholding Certificate for Pension or Annuity Payments from the recipient when applicable).
Form W-9 (Request for Taxpayer Identification Number and Certification) should be obtained prior to paying non-employees in compliance with Form 1099 filings.
PLEASE BE ADVISED: If this communication contains tax advice, it is not intended or written to be used and it cannot be used for the purpose of avoiding penalties because it does not contain the following: (a) analysis and use of the facts; (b) relating the law to facts; (c) an evaluation of all Federal and State tax issues; (d) a statement of the conclusions; and (e) any required disclosures.
© 2013 Dale K. Cline, CPA, PLLC All Rights ReservedUpdated July 24, 2017