It’s tax season again, which means everyone is scrambling around, overwhelmed, trying to find their receipts, records, and documents from the past year.
If you feel this way, you’re not alone. Most Americans dislike having to do their taxes. A recent survey with WalletHub saw 27% of survey participants saying they’d get an IRS tattoo to get out of paying taxes.
Those are some high stakes, but it’s understandable. Especially as a business owner, taxes can be daunting and overwhelming.
Luckily, we’re here to help. Keep reading for your guide on business tax return preparation.
Know Your Business Form
One of the first things you fill out when starting your business is your business form. This will affect how and what taxes you have to file.
There are five entities recognized by the IRS for tax purposes. They all have different operating and tax structures, requiring varying forms.
- C Corporation: Form 1120
- S Corporation: Form the 1120s
- Sole Proprietorship: Schedule C attached to Form 1040
- Partnership: Form 1065
- Limited Liability Company (LLC): Various based on tax classification chosen by the entity
Each business form has various benefits and drawbacks, from both a business and tax standpoint. They also have varying filing dates and extensions.
Understand Your Tax Requirements
Now that you know your business form, you should understand what you are required to pay when filing taxes. A business is often required to pay income taxes, payroll taxes, and sales taxes.
Pay special attention to payroll taxes, any business that has even one employee will be required to pay payroll taxes.
As a business, you are also required to withhold taxes from your employees’ paychecks, including:
- Federal Withholding
- State Withholding
- Social Security
- State Unemployment
- Federal Unemployment
Understanding these requirements is vital for keeping your business out of trouble with the IRS.
Note the Filing Dates
As noted above, every entity has its own filing date and extension requirements. Most taxes will be filed annually, though some payroll taxes should be filed every quarter.
Write your filing dates on your calendar and keep everything up-to-date to prevent filing your taxes late.
Hire a Professional
As a business, you’ll want to strongly consider hiring a small business tax consultant to do your tax returns.
While you most likely could figure it out without making any mistakes, it would take valuable time away from you, which could be dedicated to growing your business.
Along with this, most people hate filing their taxes because it can be confusing. There’s a lot to remember and a lot to figure out, and professionals can make sure that you get your taxes filed on time with no mistakes, and they can often find you deductions and savings that you wouldn’t see otherwise.
Time to Undergo Tax Return Preparation
Tax return preparation may not be your favorite time of the year, but it doesn’t have to be your least favorite either. If you keep all your documents up-to-date, you know your filing dates, and you use a professional, your taxes will be a breeze.
If you are looking for more business-related advice, check out the rest of our website now!