When it’s time to think about taxes, many business owners get flustered. There are so many tax forms that doing your small business taxes can seem like a hassle. Fortunately, a few basic steps can help you through the process, no matter which forms you need. So, keep reading for the basics of business filing, whether you are a sole proprietorship or a corporation.
1. Gather Your Records
Find all of the records related to your business. Before you even look at the forms, finding everything related to your income and expenses is essential. Computer programs are the easiest way to do this, rather than using paper books or remembering all of your sales and purchases for the year. If you have an accountant, you can send all of this information to them.
2. Choose Your Correct Forms
You need to find the correct IRS form for your business. All businesses need to do this step, but the form will differ depending on your structure. If you have a sole proprietorship, you will have already done this as an attachment on your personal taxes called Schedule C. An LLC with one owner can also use a Schedule C. However, corporations and businesses with multiple owners must choose the appropriate tax form for their structure, usually an 1120 or 1120S. These are a bit more in-depth.
3. Fill Out Said Forms
Once you have your form, please fill it out. When using a Schedule C attachment, you can search online for a form you can fill out on the computer. Business tax filing tends to be easiest with this type of form because it is short, and all the accepted expenses are stated. Once you’ve put all your income and deductions on the form, you must add and subtract until you have your net profit. You only have to take this number and put it on your personal tax forms. However, if you have to use a different form, you’ll have to include more information.
4. Get It Done by the Deadline
You need to know when to submit the different forms. If you’re filing and paying via a Schedule C, you must have it ready when you pay your personal taxes. That means the April 15 deadline will likely apply.
C-Corps must file and pay before the 15th of the fourth month after the end of their tax year, generally April 15. S-Corps must file and pay before the 15th, three months after the end of their tax year, typically March 15. However, while they are likely due around the same time, you cannot submit forms for these types of businesses with your personal taxes.
While it might seem intimidating, business taxes are not that bad. It all boils down to correctly choosing the proper form and filling it out. Many small businesses can even fill out their business tax forms and submit them with their personal ones. Knowing this information can help make your business taxes more straightforward and less stressful.
Read also: 3 Ways a SBL Can Help a Small Business