It’s that time again! How to file taxes for your small business.
Topic: Financial Reports,Taxes | Comments Off
With tax season upon us, it’s important to understand the options, requirements and pitfalls of filing for your business. For most people, business taxes are much more complicated than family or personal taxes and for that reason, getting help is well advised. However, if you’re hoping to avoid meeting with a tax professional, here are some tips for tackling your taxes on your own.
To begin – and building upon our last blog post – the income tax form that you’ll need to file depends on the type of entity you established when you started your business. The IRS has unique forms for LLCs, Corporations, S Corps, Sole Proprietorships, and Partnerships, all of which can be found here.
Second, be careful with your deductions. Start-up costs and home office deductions can be easily written-off, but also easily mistaken. For example, If you use your home office for anything other than your business, you can’t take the deduction. So if you work from your coffee table, you don’t qualify. Your office must be a dedicated space, not the breakfast nook.
Take a detailed look at the IRS’ guidelines before you claim your deductions.
It’s also important to be careful with your deductions if you’re reporting a net operating loss for 2011. Even if it’s your first year in business, your deductions may be subject to increased scrutiny if you’re reporting negative income. This article: 7 Common Small Business Tax Misperceptions does an excellent job of highlighting potentially costly misconceptions about filing your business taxes.
In addition, remember that over-paying your taxes will attenuate your business’ profits. As you enter your next fiscal year, it’s a good idea to set up a system to keep track of your expenses from the start. Check out WorkingPoint’s tax reporting tools, which allow you to track receipts and deductions, produce estimated tax reports and more.
Here at WorkingPoint, we’re dedicated to helping you keep more of your hard-earned money where it belongs: with you. Let us know if you have any questions, and as always, feel free to post additional comments to help others within the WorkingPoint community navigate their business taxes this year.
Best of luck, and happy filing!
-The WorkingPoint Team