Tax preparation is a process that few business owners look forward to, but it is an inevitable one. In some cases, it may be a year-round job, even for small enterprises, and includes tasks like calculating tax payments, arranging to purchase or lease capital equipment, and devising retirement-saving plans.
As a result of the number of tasks involved, you must begin planning for tax preparation and filing far before the deadline day. One way to stay on top in terms of filing accurate and timely returns is by having a checklist.
But what are the guide tips available in the checklist?
Know your tax filing deadline
Your business structure determines your tax filing deadline. The following companies and corporations have their tax year ending on the 31st of December and have an obligation to file their returns by the 15th of April:
• Proprietorship enterprises.
• Single-member limited liability companies (LLCs).
• Multi-member limited liability companies taxed as corporations.
This is the same deadline as for individual income tax returns.
On the other hand, the deadline for submitting tax returns for partnerships, multi-member LLCs, and S-corporations is the 15th of March.
There are some instances where the 15th of March or the 15th of April occur on a weekend or on a holiday. In such a case, your tax submission date will be on the next working day.
Gather personal documents and analyze your business records
You will need your taxpayer identification number, which helps the IRS to distinguish your business from others. In other cases, your Social Security number may apply for tax purposes if you have no employees.
Afterwards, collect and examine your financial statements. You can do so yourself using accounting software or seek the services of a CPA.
The financial statements include income statements and balance sheets. The former is a record of your company’s revenue, costs and profit for the year, while the latter reveals your assets, liabilities, and equity.
Ensure you are continuously preparing
Continuous preparation is necessary because readiness for this year necessitates preparation for the next one. Gather and review the above financial statements quarterly or, if possible, on a monthly basis.
Learn about tax reliefs such as tax credits and deductions
The Covid-19 epidemic continues to take a significant toll on businesses. As a result, the government avails tax credits and loans to businesses and corporations to cushion this impact. You can check with your CPA, who will help discuss these reliefs and their impact on your business tax deductions.
