Staying on top of your business taxes can be tough. There are different tax laws, forms and fees you must be aware of and they change all the time. It gets even more challenging if you’re the owner of a small business. But rather than leave them to chance, why not take control of the situation and sort them out early?
Here are some practical tips for staying on top of your business taxes.
1. Understand the filing requirements
Here’s what you need to know about your filing requirements:
Depending on the type of business entity, you may be required to file taxes annually or quarterly. For example, if you’re a sole proprietorship, general partnership or S corporation, you must file taxes annually. Corporations with employees must file quarterly employment tax returns (Form 941) and annual corporate income tax returns (Form 1120). Corporations without employees only need to file an annual return (Form 1120).
All corporations must also file an annual 990-T tax return if their gross receipts exceed $1,000 in any given year. Make sure you understand what forms are required for your business type and when they are due.
2. Understand the basics of tax filing
The way you file taxes depends on how your business is set up. There are three main types of businesses: sole proprietorships, partnerships and corporations.
If your business is a sole proprietorship or partnership, you report your share of the income or loss from the business on your personal tax return (Schedule C for sole proprietorships or Schedule E for partnerships). If it’s a corporation, you need to file a corporate tax return (Form 1120) and pay taxes at the corporate rate.
Corporations that issue stock can choose to be taxed as an S corporation by filing Form 2553 with the IRS. S corporations don’t pay corporate income taxes; instead shareholders pay personal income tax on their share of profits distributed by the company.
You should check with a local Small Business Development Center for specific details about how small businesses are taxed in your state.
3. Set up a separate account for taxes
You’re going to owe taxes. There’s no question about that, so you might as well be prepared for it by setting aside funds for taxes throughout the year.
Having a separate account for this purpose makes it easy to keep track of how much money you’ve set aside and how much more you need to put into the account before April 15 rolls around again.
Conclusion
With that said, it is important to be prepared. And so we hope that the five tips outlined above can help you achieve that goal. Abbo Tax CPA provides a range of business tax services, including business tax preparation and corporation income tax returns. In addition, we can also assist your business with corporate tax compliance matters.
So, if you are looking for some advice on how to stay on top of your business taxes, or if you have any further questions regarding our services, please contact us today or call at (619)-269-8190 for more information.
