If you own your business you will know what it’s like dealing with all those aspects of business ownership that you never have to deal with if you work for a company; however, you will also value the freedom, opportunities and other amazing aspects of being self-employed. When you have your own small business, you have the option to manage many aspects on your own or to hire contractors to help with things like marketing, accounting, hiring, etc. While it can be helpful to hire an accountant to do your taxes, it really isn’t hard to do it on your own. There are different ways to file your taxes depending on whether your business is a sole proprietorship, or a corporation or LLC. For each of these different types of entities, you’ll need to use a different tax form but the way you calculate your income will be the same. Read on to learn more about how to file your taxes for a small business:
You’ll need to have all of your business records in front of you before you can even think about starting to fill out that tax form. The records you need are the ones that document all of your earnings and expenditure for that year. It can be super easy if you use a computer program to keep track of all of this. This way, you won’t be scrambling around to collect all those papers with your different expenditures all over the place. It makes calculating deductions and taxable income so much easier. And the program will do all the calculations for you to reduce the chance of human error. But sometimes you can’t really avoid dealing with lots of physical paperwork when it comes to bills and financial documents. If you do have lots of paper records lying around, invest in some good quality tax return folders to make sure nothing important is lost. Losing just one important paper or document can mean the difference between a successful or failed tax return.
Choose the right form
Depending on your business type, you’ll have to make sure that you use the right form to file your taxes. This form is where you will declare your yearly earnings to the IRS and pay taxes on them. If you run a sole proprietorship, you can report everything on a Schedule C attachment. This means all business expenses as well as income. You can also use this Schedule C attachment if you are the sole owner of an LLC. But corporations or LLCs treated as corporations must always file a separate corporate tax return.
Fill out the form
Once you’ve selected and prepared the correct form for your business type, it’s time to fill it out. The Schedule C (for sole proprietorships or LLCs run as a sole proprietorship) are the most simple because there are only two pages to fill out. Once you complete this form, you simply deduct the expenses from the amount you’ve earned and you’ll come to either a net profit or net loss. This number then gets transferred to your tax return form. It’s recommended to take your time filling out your tax forms. You could always rush through them just to get them done, but here you increase the risk of errors. If you make a mistake on a tax form, you’re going to have to redo it anyway. And since you’ll probably have passed the deadline by that point, there will be fees involved with a late tax return. So just take the time now to fill out your forms correctly, even if it takes a little longer the first time. It will pay off in the end when you don’t have to see the tax forms again until next year.
Don’t miss deadlines
When it comes to filing your taxes, meeting deadlines is extremely important. For most people, the deadline for filing of taxes is April 15. It is possible to file for an extension but you will pay extra for this. It’s best to just get your paperwork in order well before the deadline so you don’t end up scrambling to meet it. Tax season doesn’t have to be stressful, but it’s possible to bring a lot of stress onto yourself if you don’t take deadlines seriously. Just ensure you get your papers and documents in order several months before you know you’ll need to file. This way, the tax process will go smoothly and easily, without any hitches.