Are you a small business owner who is unsure of how to file your taxes?
Don’t worry; you are not alone.
Filing taxes can be confusing, especially for those doing it for the first time.
In this beginner’s guide, we will walk you through filing your taxes as a small business owner.
We will provide tips and advice on what you should do to make the process as smooth and stress-free as possible.
Now Let’s get started!
8 Steps to Filing Your Taxes Properly as a Small Business
If you are a small business owner, you must file your taxes annually. This can be a daunting task, especially if you are new to the process.
Having a corporate tax accountant next to you throughout the process can ensure you’re doing everything by the book!
Corporate tax accountants can help you with the following:
- Determining which tax forms you need to file
- Ensuring you are taking advantage of all the deductions and credits you are eligible for
- Filing your taxes electronically
- Paying your taxes
Before getting in touch with an accountant, it’s best to brush up on some knowledge about filing taxes to negotiate your prices better!
Here are eight steps to keep in mind about filing your taxes:
1. Determine Your Business Structure
The first step in filing your taxes is to determine your business structure.
Are you a sole proprietor? Do you have a partnership? Or are you a corporation?
For example, if you’re a sole proprietor, you will file your taxes as an individual. In contrast, being in a partnership or corporation demands a different approach.
So the type of business structure you have will determine how you file your taxes.
2. Gather Your Tax Documents
The next step is to gather all of the necessary tax documents. This includes things like your income statements, receipts, and expenses.
Make sure you have everything you need before you begin the tax-filing process.
To make compiling records smoother, you can use software like QuickBooks Self-Employed. This software allows you to track your income and expenses in one place.
3. Determine Your Tax Deductions
As a small business owner, you may be eligible for certain tax deductions.
Some standard deductions include office expenses, travel expenses, and home office expenses.
Make sure you take advantage of all the deductions you are entitled to. This can help reduce your overall tax bill.
The number of deductions depends on several factors, including your business type, your business expenses, and your income.
A corporate tax accountant will be able to help you determine which deductions you are eligible for.
4. Choose the Correct IRS Form
The next step is to choose the correct IRS form. This can be tricky, as there are many different forms to choose from.
The form you choose will be based on your business structure and the type of deductions you take.
Most small businesses choose to file sole proprietorships using the Schedule C Income Tax Form.
The Schedule C Income Tax Form reports income and expenses for sole proprietorships.
This form must be filed along with your income tax return.
If you run an LLC and you’re the sole owner, the IRS allows you to file a Schedule C.
But if you choose to run your business as a corporation, you’ll need to file a corporate tax return using Form 1120.
If you need help choosing the proper form, you can consult with a corporate tax accountant.
5. Fill Out the IRS Form
Once you have chosen the correct form, it’s time to fill it out.
This can be a daunting task, but it’s essential to take your time and make sure you fill out the form correctly.
The IRS Form must be filled out online on the IRS website. You can also fill out the form by hand and mail it to the IRS.
But be warned: Filling out the form by hand can be tedious and time-consuming.
If you don’t have a lot of time on your hands, it’s best to let a corporate tax accountant handle it.
If you make a mistake, the IRS may come after you for back taxes.
6. File Your Taxes Electronically
The next step is to file your taxes electronically. You can do this by filing Form 4868 with the IRS.
This will give you an extra six months to file your taxes.
If you owe the IRS money, you will need to pay interest on the amount you owe. So it’s best to file your taxes on time to avoid paying interest.
You should start filing your taxes in January if you’re a sole proprietor.
But if you’re in a partnership or corporation, you have until March 15 to file your taxes.
If you need more time, you can file an extension using Form 4868.
7. Pay Attention to Deadlines
It’s essential to pay attention to deadlines when you’re a small business owner.
For instance, if you file a Schedule C, you have until April 15 to file your taxes.
But if you’re in a partnership or corporation, you have until March 15 to file your taxes.
If you need more time, you can always file an extension using Form 4868.
But remember: You will still need to pay any taxes you owe by April 15. If you don’t pay your taxes on time, you may be subject to interest and penalties.
8. Pay Your Taxes
The final step is to pay your taxes.
If you owe the IRS money, you will need to pay the amount in full.
You can do this by mailing a check or money order to the IRS. You can also pay your taxes electronically using the Electronic Federal Tax Payment System (EFTPS).
Once you’ve paid your taxes, you’re done!
You can sit back and relax knowing that you’ve completed one of the most important tasks of being a small business owner.
Make the Process of Filing Taxes Easier
Filing taxes can be a complex and time-consuming process, but it doesn’t have to be.
If you’re a small business owner, you can do a few things to make the process easier.
First, hire a corporate tax accountant to help you determine which IRS form to file.
Second, take your time and make sure you fill out the form correctly.
And finally, pay attention to deadlines and file your taxes on time.
By following these tips, you can make the process of filing taxes much easier!
