How to Start a Business in Louisiana, Accounting & Tax Checklist
New Business Accounting Checklist — Registration for business formation and tax
Getting a business off the ground in Louisiana takes more than just a good idea. From selecting an entity to establishing bookkeeping and addressing tax registrations, early accounting and tax decisions mold your company’s compliance, cash flow and growth potential. This guide provides a high-level overview of everything you need to do, from an accounting and tax perspective, when you are starting a business in Louisiana.
Select an entity and taxation
Deciding on the right legal structure—sole proprietorship, partnership, limited liability company (LLC), or corporation—can have a major impact on both federal and state tax responsibilities, owner liability, accounting complexity and cost of setting up your business. LLCs provide liability protection and pass-through taxation for many owners; corporations have different rules for reporting income and withholding payroll taxes. Before formation is finalized, think about how each entity will impact income tax filing and payroll taxes as well as whether independent accounting records must be kept.
File for the necessary state IDs and business license.
Louisiana Business Formation Complete the Louisiana business formation process with the relevant state office. After you establish your business, register for the state tax accounts that apply to your operations: sales and use tax; withholding taxes on employees; and any special excise taxes associated with your industry. Generally, you will need the registered business name and official entity formation documents in place prior to registering with state tax authorities.
To obtain an employer identification number (EIN)
A business bank account, employees and filing federal tax returns sometimes require an employer identification number. Even sole proprietors sometimes find an EIN advantageous for keeping personal and business taxes apart. You want to use it consistently when you file your taxes and report payroll information. Early guidance about employer identification numbers can smooth the process of setting up banking and payroll.
Get dedicated business bank account
It’s very important to separate your business from personal finances for record-keeping purposes and legal protection. From there, open a business account using your formation documents and EIN. Regular use of the account for sales and expenses can make reconciliation easier and also help prevent mistakes come tax time.
Select an accounting method and establish record keeping
Choose between cash and accrual accounting depending on your revenue cycles and inventory requirements. Set up a chart of accounts that mirrors your business operations — revenue streams, cost of goods sold, payroll, rent and utilities should all have organized categories. Simple regular bookkeeping (weekly or monthly) keeps your financial picture update and avoids year-end surprises.
Establish payroll and withholding features
If you will an employer, register for state withholding and unemployment tax accounts and establish a payroll processing system. Withholding Employer’s responsibilities Withholding applies to federal, and in many cases, state income taxes. Employers withhold payroll taxes from paychecks on a regularly established timeline. Precise records of hours helps to file taxes, manage benefits and comply with wage laws.
Registering for sales and use tax, know local rates
Louisiana sales tax is also imposed on retailers and most service providers. In most areas you register with your state sales tax authority and sometimes you need parish or local taxes (think cities/parishes). Keep track of the sales tax you've collected on an ongoing basis (separately from other funds) and forward it according to your registration (monthly, quarterly, or annually).
Plan for estimated income taxes
If your business is organized as a pass-through or corporation, owners — or the entity itself may have to pay estimated tax payments quarterly. Work out your taxable income, make regular savings and pay on time to prevent paying penalties or interest.
Establish recordkeeping and documentation practices
Keep categorized copies of receipts, invoices, payroll and contracts and bank statements. Keep your tax returns and accompanying documents for a few years, as mandated by law. By digitizing documents and having a set naming and filing structure by year, audits and tax preparation is much easier.
Track deductible expenses and credits
Determine the typical kind of expenses not deductible including start-up costs, business supplies, travel and home-office deductions (if applicable). Save receipts and accurately categorize expenses. Finally, for tax savings consideration at the individual investor level check out tax credits related to hiring, investment or energy efficiency—these can actually reduce a firm’s tax liability if properly documented.
Understand industry-specific taxes and licenses
Some businesses have special taxes or licensing requirements — hospitality, professional services, construction and fuel sales are common examples. Begin researching local and state regulations early to obtain any permits you may need, and include those compliance costs in your budget.
Keep internal fraud controls in place
Segregate responsibilities when practical: break up authorizing invoices for payment, disbursing cash and reconciling the bank among various individuals. Have approval limits, need a receipt for reimbursement and regularly check bank or credit card statements.
Establish a financial reporting cadence
These bespoke financial reports (PL, balance sheet, cash flow etc.) are used to track performance. Regular reviews, once a week or once a month, mean you can spot trends, manage cash flow and make informed decisions about hiring people, setting prices or investing in your business.
Get ready for annual filings and renewal needs
Most organizations are required to file an annual report or update registration with the state. Also, special sales tax permits and some types of licenses must be renewed. (Make sure renewal deadlines are marked on a calendar so you're not late and avoid any penalties or administrative dissolution of the entity.)
Know when to get help from a professional tax preparer
If you have complicated tax needs, multi-state operations, a high level of payroll or anticipate rapid growth — just to name several examples — it's a good idea to seek help from a tax professional. The advisor can assist with entity selection, tax planning and compliance management that reduces exposure even when still remaining in conformity with all reporting requirements.
Practical checklist summary
- Deciding the form of entity and knowing tax effects
- Sign up with state and local agencies
- Get an EIN and a business bank account
- Establish the bookkeeping and chart of accounts and accounting method
- Enroll in sales tax and payroll withholding.
- Make a plan for your estimated and tax payments
- Keep tidy records and establish internal controls
- Prepare financial statements weekly and prepares to renew
Founding a business is equal parts dreaming and disciplined action. Organizing accounting and tax setup from the get go mitigates risk, provides cash flow clarity, and liberates your ability to build the business. Model this accounting and tax checklist as a roadmap, customize it for your needs, and evolve the practices of your company over time.