Friday, May 20, 2016

Tips for Filing Business Taxes

When you’re new to the business world, the thought of filing your business taxes for the first time can be a bit overwhelming. There are a lot of new rules and requirements to be aware of, and filing business taxes is definitely a whole different ball game than filing personal taxes. For this reason, many first-time business filers will hire professionals to help them. In addition to hiring an accountant to assist you when you file your business taxes, there are some other things you can do to make the process go more smoothly and feel less stressful.   

When to File

To begin with, you should know that, when tax season rolls around, you will be required to file business taxes, as long as you have a taxpayer ID number. Many people make the mistake of thinking that, unless they have been in business for a year, they do not have to file taxes. In truth, though, when tax season comes, taxes must be filed, regardless of how long the business has been open.

Whether or not you have to file business taxes is also not based on profit. No matter how small the profit may be, businesses still need to file taxes at the correct time, end of story.

Gather Necessary Documentation

When filing business taxes, you will need to have a lot of documentation on hand. Gathering all of this information ahead of time and having it easily accessible will make the filing process go much more smoothly. When possible, sort the documents based on which tax line they apply to; this will make the process go even more quickly.Some documents you will likely need when filing include:

l  Receipts related to business purchases/expenses/write-off
l  Invoices
l  Financial reports
l  1099s
l  Bank statements
l  Other proof of income or verifying information

Know Classification-Specific Rules

While businesses have their own set of filing rules, there are also more specific tax rules related to each business’s classification. Make sure you know what category your business falls under, such as limited liability corporation or sole practitioner, and that you understand how your classification affects your taxes and the forms you must file.

Don’t Miss Deadlines

One of the most important parts of filing business taxes is ensuring that you do not miss any filing deadlines or other tax-related deadlines. There are specific dates by which W-2s must be sent out, specific dates by which certain information must be reported, and more. Check the IRS website or ask your accountant about important dates and deadlines so that you can file for an extension if necessary and avoid fines and fees.

Don’t Wait Until the Last Minute

Finally, the most important piece of tax filing advice for any business owner is to avoid waiting until the last minute! Don’t file at the last minute. Don’t get documents together at the last minute, and don’t wait until the last minute to hire a financial advisor or accountant. Preparing ahead of time, as well as following these basic tips, is really the key to a successful first tax season as a businessowner.