Why is calculation relevant in farm operation?
Answers
Answer:
We all know about the two inevitabilities of life: death and taxes. You become acutely aware of the “T” word when setting up a business. The IRS wants to know all about you and how much income you are generating, and the state comptroller wants to know if you are collecting sales taxes.
Whether or not you owe Federal taxes at the end of the year, you will need to get an Employer Identification Number (EIN) from IRS. You fill out a form (currently the W-9) and return it to IRS, they will then assign your business a permanent ID number. This number will be on all correspondence with the Department of the Treasury, Internal Revenue Service.
If you plan to sell anything retail, you also need to get a tax ID number from the state comptroller. You will be required to report retail income monthly, quarterly or annually (depending on your taxable sales) and pay the taxes you collect based on rates in the counties or cities in which you sold taxable, retail product. Please remember that the sales tax you collect is not yours. This money should be kept separate from other income so it can be paid promptly when it is due.