How to File Your Business Taxes
By: Malory Wood d/b/a The Missing Ink
Tax season is now in full-force! Therefore, it is wise to begin the organizational processes now. Not only are your personal taxes important to get in order and prepare, if you are a small business owner, time is of the essence. Business taxes differ from personal taxes in a variety of ways and can be much more complicated to prepare. For instance, there are multiple ways to file your business taxes dependent upon whether you run a sole proprietorship, LLC, S-Corp, etc.
Here is a guide to prepare and organize your business taxes before time runs out:
Prepare Your Records
Each and every business record you possess is important and must be included. You must document not only your business earnings, but your business expenses as well. These items will help generate your deductions and assist in calculating your income over the last year. Keeping track of every nickel and dime by using a digital software system will make this process almost effortless.
Choose Your Tax Form
Whether you own a sole proprietorship or an S-Corp, it is imperative to determine which tax filing form is appropriate for your business. If you own a sole proprietorship, you must document your business income and expenses using a Schedule C attachment. This form will be attached to your personal income tax return.
If you own a larger business, such as an LLC, you are permitted to use a Schedule C form; however, a separate corporate tax return, such as a Form 1120, will be more appropriate if your company acts as a corporation.
Fill in the Blanks
Now that you have selected the proper tax form, it is time to fill in the blanks. Document and record each income and expense you can claim and simply subtract your expenses from your total earnings. This will provide you with your total net profit as well as loss.
If you are a sole proprietor, convert and include this number over to your personal income tax form. If you own a larger scale business and are filing a Form 1120, this number will be your taxable business income. Note: Form 1120 is a separate entity from your personal income tax return.
Claim Business Credit
If you are interested in claiming general business credit, you must find the correct form that applies to how your business operates. Once you select the appropriate form, fill out the form to claim your current year business credits.
Additionally, you may need to file a Form 3800 in conjunction with the previous business credit form. If you file a Form 1040 Schedule C, you have the potential to take advantage of the Earned Income Tax Credit (EITC). This credit is applicable to those who earn low to moderate income wages. The EITC will reduce taxes owed and may provide a refund to those that are eligible.
Do Not Miss Your Deadline
Each type of business will render a different deadline filing date. Be aware of which deadline applies to your business. A Schedule C form is typically filed in conjunction with the personal income tax return filing deadline of April 15.
A Form 1120 will render the same deadline as personal income taxes. If you are filing a Form 1120S, used solely for an S-Corp, you must meet the deadline of March 15. Note: This form may NOT be included in conjunction with your personal income tax return.
CAM Financial & Tax Services is here to answer all of your tax-related questions with professional, expert advice from our highly-trained staff. Customer service and maximizing your deductions are our highest priority. We provide full tax preparation services for partnerships, corporate, and individual federal and state incomes. Please call us today toll-free at (973)759-4045 to get started on your tax returns today!
Proudly serving the Essex County community since 2000.