6 Tips for Getting Your Small Business Taxes Right the First Time

There are a variety of confusing aspects to being a business owner and managing your finances; however, one of the most confusing elements is doing taxes as a small business owner. Whether you are scrambling to find receipts or worrying over filling out each form correctly, tax season probably has your stress levels at an all-time high, but it doesn’t have to. Use these six tips to get your small business taxes right the first time around.

Keep Your Records in Order

To accurately complete your taxes and accounting for business expenses and deductions, you need evidence for everything. Take the time to gather all of your business records and put them in a proper filing system. Instead of having it go A-Z, though, you should consider having a different file for every month’s financial records. You’ll need records of your earnings and expenses too, so collect all of the appropriate documentation, including receipts and purchase orders. For example, if you bought bins from Quantum Storage or have made any other such financial investments on behalf of your company, then you’re going to want to hang onto the receipts. Staple any related receipts together and place them in the filing system. It would be best for you to make it a habit of filing future transactional records as soon as any purchases are made.

Select the Correct Form

The next step to complete your taxes correctly is choosing the right form. In any case, you need to report your earnings to the IRS and pay taxes on them, but selecting the appropriate form is dependent on how your business operates.

Many small businesses operate as a sole proprietorship, which allows them to file all their business income and expenses on a Schedule C attachment to their personal tax return. If your business functions as an LLC and you are the independent owner, you can also file via Schedule C. However, if your business runs as a corporation or serves as an actual LLC, you need to prepare a corporate tax return on a Form 1120.

Keep Track of Deadlines

Look up all of your filing deadlines early on in the process, and be sure to mark them prominently on your calendar. As a business, you’ll have some additional deadlines by which to abide. If you are filing a Schedule C, you will simply attach the form to your personal return and submit everything by the April 15th deadline. However, if you need to file a Form 1120, you much complete and file it by the 15th day of the third month following the close of the tax year. For most taxpayers, this deadline is March 15. Keep in mind that a Form 1120 is not sent to the IRS with your personal income tax return.

Create a Checklist

Especially as a business owner, you’ll have a lot to keep straight at tax time. Do yourself a favor and create a checklist for all of your income and expenses for the forms you need to complete. You’ll need to include receipts, sales records, business interest, and other income as well as advertising expenditures, employee wages, rental or mortgage expenses, and more.

Consider an Extension

If you feel like you’re running out of time and won’t meet the tax deadline, don’t rush to get things done. Just keep in mind that while you do get extra time to file, you don’t get extra time to pay. If you do need an extension, estimate what you owe and send the payment with your extension request. Otherwise, you’ll end up paying extra in interest and penalties.

Seek Advice

Particularly if you are filing for the first time as a business owner, there is no shame in seeking some professional advice. As you begin or even after you complete your return, touch base with an accountant to make sure you’ve completed everything you need to.

Filing your taxes as a business owner can be stressful, especially if it’s your first time. However, if you follow these tips, you’ll be able to get your small business taxes right the first time around and not have to worry.