Entrepreneurship is on the rise and has been accelerated by large businesses downsizing and releasing employees, many of whom are starting their own businesses. Throughout the U.S., thousands of new businesses are formed every week and are potential clients for smaller CPA firms. In many cases, they are substantial enough to be targets for larger firms as well.

The new entrepreneur may have no idea of the extent of the financial recordkeeping and reporting required when starting a new business. Unfortunately, even someCPAs are not fully aware of the reporting requirements. Following are some reminders relating to form of organization, federal, state and local reporting requirements, and some other considerations when starting a new business.

First, the new business may have to file with the proper local authority (e.g., the County Clerk) if it expects to use a trade name. A local attorney should be able to help with the details.

Second, if appropriate, the CPA can assist his or her new client in filing for an Employer Identification Number (EIN). After completing a Form SS-4, a call can be placed to a specifically designated IRS telephone number and an EIN will be assigned immediately. This EIN is entered on the upper right corner of the Form SS-4 which is then faxed or mailed to the IRS. This EIN will be recognized not only by the federal government but also by state and local authorities for identifying the business. The EIN is equivalent to the social security number of an individual.

There is no particular order to the remainder of the reporting requirements. This depends on the type of business, the number of employees, and the form of business organization, i.e., individual, partnership, C corporation, S corporation, or professional corporation.

Philip Wolitzer, MBA, CPA, is Professor Emeritus at Long Island University and a Visiting Professor at Marymount Manhattan College. He has a consulting practice in Litigation Support and Quality Control. Mr. Wolitzer is a member of the AICPA, NYSSCPA, American Accounting Association, and American Arbitration Association. He received the NYSSCPA Distinguished Service Award for 1990.

Robert Wolitzer, MBA, CPA, is a Senior Tax Associate at Lopez, Edwards, Frank & Co., New York, N.Y. Mr. Wolitzer is a member of the AICPA and NYSSCPA. He serves on the NYSSCPA Exempt Organization committee.

PHOTO : The Way Off Broadway Deli, St. Paul, NC. Deli is part of a school project, with proceeds distributed among student employees.