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Federal Requirements

In addition to fulfilling local and state requirements for doing business in Pacifica, business owners must also make sure they fulfill certain federal requirements.

All businesses are required to file tax returns. Also, you may have to report certain business information to the Internal Revenue Service (IRS) and in some cases, withhold employee taxes. Contact the IRS for information and instructions. The IRS has publications that describe general requirements and give help in developing a system for ongoing tax reporting. Publications for small businesses include:

  • Publication 334 - Tax Guide for Small Business
  • Publication 583 - Information for Business Taxpayers
  • Publication 552 - Record-keeping for Individuals and a List of Tax Publications
  • Publication 509 - Tax Calendar

Taxpayer Identification Number
You'll need to obtain a Taxpayer Identification Number (TIN). It can be either your social security number (SSN) or your employer identification number (EIN). Most small businesses need an EIN even if they don't have employees. Publication 583 gives information on an EIN and how to apply for it with the Internal Revenue Service.

Federal Business Income Tax
Every type of business has to file business income tax. Corporations pay tax separately from shareholders. Sole proprietorship, general partnership and sub-charter S corporations are taxed as an individual. Check with the IRS about the tax forms you should fill out. The IRS offers workshops for new businesses.

Self-Employment Tax
Everyone is responsible for paying social security tax. If you are self-employed, your social security contribution is made through the self-employment tax. Check with the IRS to determine which tax forms you should use for your particular type of business.

Excise Tax
You may have to pay excise taxes if you produce or sell certain products, such as chemicals, alcoholic beverages, tobacco, guns, etc. Check with the IRS if you're affected and find out which tax forms you should use.

Taxes for Employees
If you have employees, it is necessary to:

  • withhold income tax from each employee's paycheck
  • be liable for an employer's portion of social security taxes in addition to the tax withheld from each employee
  • pay federal unemployment tax (FUTA) under certain circumstances

Consequences for not reporting or paying taxes vary. At the very least, you may get audited and/or assessed penalties. The IRS can close your business and freeze your assets. Getting bank loans will prove difficult, as loan applications require tax returns. Underestimating your tax and income is also not advisable, as the bank to which you apply may think you don't have enough money to repay the loan.

US Internal Revenue Service
Federal Building, Main Floor
450 Golden Gate Avenue
San Francisco, CA

Employment Eligibility Verification (Form I-9)
Title 8, United States Code, Section 1324A requires employers to verify employment eligibility of individuals on a form approved by the Attorney General. This form will be used to verify the individual's eligibility for employment in the United States. Failure to present this form for inspection to officers of the INS or Department of Labor within the time period specified by regulation, or improper completion or retention of this form, may be a violation of the above law and may result in a civil money penalty. Employers are subject to substantial fines if the INS determines that an employee is not eligible for employment in the United States.

U.S. Department of Justice
Immigration and Naturalization Service
630 Sansome Street
San Francisco, CA