It’s not a secret: Americans don’t like Tax Day. A 2014 survey found 56% don’t like doing their taxes, while 26% absolutely hate it. Doing your taxes is a complex process. You have to get all of your documents together, meet with your accountant, and potentially answer more questions. Even if you hire small business tax preparation services, you still have to provide fundamental information about your business, income, and expenses in a timely manner.
Many entrepreneurs feel overwhelmed by the thought of filing their small business taxes. If that’s how you feel, we don’t blame you since there’s a lot that goes into preparing your business for tax day. Even before the deadline for actually filing your tax return, there’s a lot of tax prep that you should ideally be doing throughout the year.
Small Business Taxes Depend on Business Structure
These are the basics of paying your small business taxes:
- What types of taxes you need to pay
- How much you have to pay in taxes
- When you have to pay small business taxes
- And how you pay small business taxes
When it really comes down to it, these four basics depend on your business’s legal structure. Whatever your business entity is, you’ll first need to know how it affects your tax burden. We highly suggest consulting a small business tax accountant to ensure you understand your tax obligations.
What Exactly Do You Need for a Successful Tax Day?
1. The Correct Due Date
If you’re new to paying business taxes, you may assume that all annual tax forms are due April 15th. Nope. Have a partnership, multi-member LLC or S Corp? These businesses typically file Forms 1065 or 1120S, which are each due a full month earlier than normal corporate or personal returns. That’s March 15th for businesses operating on a calendar year.
Knowing when your filings are due is essential. You don’t want to drop off a box of paperwork to your CPA a few weeks too late and get stuck with a late penalty. Late 1065, for instance, will set you back $210 per month per partner.
2. General Small Business Information
Tax filings require some basic information about your business. While some requirements are a bit more obvious (like your business name), you may have to look up other information such as your EIN or the date you started or incorporated your business. Commonly required information includes:
- Business name
- EIN or social security number
- Business address
- Business start date
- Business assets
- Accounting method (cash or accrual)
Your CPA or tax accountant may provide a list of all general small business information required to continue the tax preparation process.
3. Income Information
Whether you file personal, corporate or just informational returns, the IRS’s main interest is income. If you sell a product, you’ll also need to provide the information needed to calculate the cost of goods sold. That includes your inventory at the beginning and end of the year, cost of labor, and costs of inventory, materials and supplies purchased in the year. You will need to gather the following information in regards to business income:
- Gross receipts
- Sales records
- Any sales returns (refunds) or allowances (discounts)
- Any interest from checking or savings accounts
- Any dividends
- Any capital gains
- Any other income
4. Records of Expenses
Business deductions can greatly reduce your taxable income if you properly record your deductible expenses. Common deductions include insurance, mileage, rent, utilities, travel, advertising, office supplies, employee wages, taxes, and legal fees. And while expense records may not exactly spark joy, let’s hope you hung on to all your receipts and mileage logs. It is critical to track and document these expenses throughout the entire business year to make tax time much less stressful
5. Other Information
There are a few other odds and ends that will be useful to have in hand when filing your business taxes:
- Last year’s business tax return
- Any IRS tax statements you receive in the mail
- Copies of any other tax-related documents you’ve sent or received (such as 1099s)
- Any profits and losses statements, balance sheets, payroll documents, or other general accounting documents for your business
Final Thoughts
Tax season can be a very stressful and dreadful time for many small business owners. With the proper year-round preparation, however, tax season will feel like a breeze! A small business tax provider can ensure your taxes are filed correctly while maximizing on all possible deductions.
Limitless Investment and Capital’s Small Business Tax Preparation Services.
With the support of Limitless Investment and Capital’s tax preparation services in Phoenix, you have the help you need to address your issues – whether they be tax resolution and representation, compliance, management reporting or general business concerns. Save time and money by partnering with our CPA’s in Phoenix to ensure that you know your tax requirements, are able to quickly to resolve issues, maintain your compliance and protect your bottom line year-round. Schedule a FREE consultation TODAY!
