Filing taxes as a small business owner for the first time can be an intimidating experience. Preparing your taxes can be difficult and confusing, especially when trying to ensure you are taking advantage of all possible deductions. Often it is worth it to seek out the services of a tax specialist or accountant who can help you file confidently.
They will not only be able to guide you through the right steps and paperwork but also advise you on potential pitfalls or credits/deductions that may be beneficial for your business in the future. Researching and finding an experienced consultant can be time-consuming, so plan and start early to ensure your business is set up for success when filing taxes come around.
What Are The Different Types Of Taxes Small Businesses Have?
There are a variety of taxes that small business owners must consider. These include:
Income Tax
This is the most common type of tax, and it applies to any income earned over the year. Depending on the structure of your business, you may be required to file quarterly or annually.
Self-Employment Tax
This tax is applied to all self-employed individuals to cover Social Security and Medicare Taxes. It should also be noted that this tax rate can differ from state to state.
Sales Tax
This will apply if you sell products rather than services within certain states or localities with a sales tax requirement.
Federal Employment Taxes
Employers are required to pay these taxes on behalf of employees, and they must be filed quarterly. Federal income taxes, Social Security taxes, and Medicare taxes must all be considered when filing.
Property Tax
This is generally applicable to businesses that own land or real estate.
Excise Tax
Excise taxes can vary depending on the type of product you are selling and any applicable laws in your area. Examples of items that incur excise taxes include petroleum, coal, and kerosene used in aviation.
Which Tax Forms Do You Need To File Your Small Business Taxes?
If you’re a small business owner, there are several tax forms that you need to file to complete your taxes. The most common forms include 1040, Schedule C, and Form the 1120S for businesses with employees or who operate as S-corporations.
You must use the Schedule C form to report any income from self-employment activities. This form calculates and reports any net profit or loss from the business. You will also need to include the following documents:
- Income statement
- Expense statement
- Capital gains/losses worksheet
- Business assets worksheet
- Balance sheet
- Any applicable receipts and other financial documents
If you operate as an S-corporation, you must file Form 1120S to report any corporate income. This form will include the company’s financial results and shareholders’ equity. You may also need to provide additional documents such as balance sheets, profit and loss statements, bank statements, and other financial documents.
Finally, all business owners must use the 1040 form to report their income taxes. This is typically done by filing either the 1040EZ or 1040A forms. On these forms, you will list your adjusted gross income (AGI), which includes all of your business profits or losses from the tax year and any other income sources. Business structure, expenses, and deductions will also be taken into consideration.
How Do You File Small Business Taxes?
Once you have filled out all of the necessary forms, it is time to file your taxes. Depending on your business income and where you live, you may need to file taxes with the federal government and your state or locality.
Most small business owners will use either e-file or mail their forms to file with the IRS. When filing electronically, double-check that all of the information entered is correct before submitting it. If filing by mail, make sure to include a copy of each filed form and any applicable payment vouchers.
You may also need to file state taxes if the business is registered in a state other than where you live. This can typically be done online or by mail, and you may need to pay any applicable taxes with your state filing.
When Is The Deadline For Filing Your Small Business Taxes?
The deadline for filing your small business taxes is typically April 15 of the following year. If you are self-employed, you may have an additional deadline on June 15 to file any remaining taxes due. Check with your state or locality’s tax regulations to see if these dates apply in your area.
It is important to note that certain penalties and interest can be applied if you fail to file or pay by the required deadlines. In some cases, a tax extension may be granted so that you can complete the filing process without incurring any financial penalties.
What Are The Benefits Of Filing Your Small Business Taxes?
Filing taxes as a small business owner has several benefits, most notably taking advantage of any credits or deductions available to your business. Additionally, filing business taxes accurately and on time will ensure that you comply with tax laws and regulations. This can help protect you from any potential legal issues or fines down the road.
Finally, filing taxes allows small business owners to analyze their financial performance over the year. This can help them make informed decisions about allocating resources for the future and better managing their operations. Limited liability company owners can also use their filed taxes as evidence of their official business status.
Final Thoughts
Filing taxes for your small business for the first time can be daunting. However, with the right preparation and resources, you can maximize any potential deductions and credits while ensuring that you comply with tax laws and regulations. It is always beneficial to seek out the advice of an experienced accountant or tax specialist who can help guide you through the process.
If you are a small business owner who would like more information on how to maximize your financial situation, a Bolder Money coach can help. Contact us today to learn more about how we can help you prepare for estimated taxes or other financial goals!
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