Filing business taxes alone is time consuming and stressful.
In fact, according to a 2016 WalletHub Tax Fairness Survey, three-quarters of Americans are saying that the tax code is too complex. Don’t worry. We have some helpful tips on how you can make tax season go more smoothly.
Identify the Proper Tax Documents
It is very important to have the IRS forms you need.
The types of forms depend on your business type. Just to give you an idea, here are forms that you will need in filing your taxes:
- Corporation: Use Form 1120 to figure income tax liability.
- S Corporation: Fill out Form 1120S.
- Partnership: File Form 1065 (U.S. Return of Partnership Income). This is typically used by LLCs.
- Sole Proprietorship: For those who are operating sole proprietorship, you must report your income on Schedule C (Form 1040). Also file Schedule SE (Form 1040) to figure out your self-employment.
Keep Records Updated and Accurate
Keeping your records will help you monitor the progress of your business and also help you prepare your tax return.
When record keeping, you should retain the following:
- Gross receipts – the income your business receives.
- Purchases – Any items you buy and resell to customers.
- Expenses – costs your business incurs (think employee wages, office rent, insurance premiums, etc.).
- Employment taxes – employment tax records, which the IRS says to keep for at least four years.
- Assets – property used for your business, including furniture and machinery.
- File Online – when shopping for clothing, you can also pay taxes online.
- File in separate even you are married – if you and your spouse have similar incomes it is a better option to pay separately
Prepare an Income Statement
It will become easier to prepare an income statement if you have proper record keeping. With that, you will have most of the data you need to see how much money you made.
Understand What Deductions You Can Take
As a taxpayer, we are already aware that deductions can lower our taxable income tremendously. It could save lots of money so understanding the deductions you can take is really worth taking time! Examples of this are: Office supplies, travel expenses, meals and entertainment, and loan interest
You cannot file taxes under tight deadlines!
You can make tax season will be less stressful and less complicated. More importantly, you will have more time to focus on running your business.
If you need help filing your taxes, hire a tax professional. You might know your stuff well, but skilled accountants can help you find even more savings and before you even know it, tax season will come and go without any stress.