Oh no. It’s that time of the year. You’ve been dreading this part of being an entrepreneur ever since you started your business a little while ago. It’s tax season.
Benjamin Franklin once said that the only two things in life that are certain are death and taxes, and the adage is nonetheless true when you’re running a small business.
If you number among the entrepreneurs who don’t know how to file business taxes, read on because you’re in the right place. In this post, we’ll take you through the process of filing business taxes.
Gather All Documentation
The small business tax filing process is infinitely simpler when you have all the documentation you’ll need before you even start the process. Otherwise, you’ll be running around like a chicken with its head cut off right before the deadlines to submit.
The documentation in particular that you will need will be everything related to business income and expenses. All of the closed books from each fiscal month are essential in this step. If you leverage an online bookkeeping system like Quickbooks or Freshbooks, this step will become a lot easier than with penciled-in, manual journal entries.
Determine Which Form is Right for You
The right form to fill out to report your taxes may not be obvious at first. The form that you fill out will be dependent largely on the type of incorporation you chose to go with when you formed your company. If you’re wondering how file small business taxes as an LLC, you’ll need to file form 1040, 1065, and 1120. If you want to figure out how to file corporate taxes, such as for an S or C corp, you’ll need form 2553 or 1120, respectively.
Also note that you may need to fill out attachments, like a Schedule C, if you’re a sole proprietorship. Knowing this info is crucial to make sure that you submit all the forms you need to at the right time.
Fill Out the Form
The next step is simply filling out the form. If you did the first two steps right, and identified all of the documentation that you need, as well as the right forms and attachments that you need to fill out, this should be one of the easier steps.
After all, the only thing you really need to do is read and write in the right numbers. If you have all the numbers you need and know which ones to put in, then you’ll be just fine.
Consult an Expert
Think about it this way — how expensive could misfiling your taxes be? Not only do you waste all of the time spent on the initial filing since you have to do it over, but you could be subject to IRS fines. Or even worse, you could have overpaid what you needed to because you didn’t take advantage of the right loopholes!
Compare those significant expenses to the relatively moderate expense of consulting a Tax Accounting professional. A few hundred dollars to check over your work could save you a lot of time and headaches in the long run.
How to File Business Taxes: Submit on Time!
Once you have your forms ready to go, submit them ASAP! There’s no point in waiting until right before the deadline. Submit as soon as you’re able, and you won’t run afoul of any IRS policies.
Now that you know how to file business taxes, make sure you subscribe for more tips to live your life of financial freedom!