Taxes & IRS Requirements

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Because you will be self employed with your home business you will need to pay taxes differently.  How you pay your taxes will depend largely on the structure you chose for your business. If you are operating as a sole proprietorship for your Federal taxes, you will need to make estimated tax payments, file a Schedule C form with your taxes and pay self employment tax.  If you have chosen to incorporate or set up as an LLC your taxes will be handled differently. Business taxes are beyond the scope of this article, but you can learn everything you need to know to get started on the IRS website here:

Starting a Business - from the IRS

If you plan to either have employees or incorporate your home business instead of running it as a sole proprietorship you will need to get a free Employer Identification Number (EIN) from the IRS for when you file taxes. If you plan to just be a sole proprietorship you can generally file your taxes with your existing social security number.  For more information to decide if you need an EIN, go here:

http://www.irs.gov/businesses/small/article/0,,id=98350,00.html

You will also need to research the tax requirements for businesses at the state level.  You should be able to find information on state tax laws using the links listed in the licensing section. If you cannot easily find the information on the website for you state, call your state’s Department of Revenue and ask them what you need to do or where you can find more information.