How To File Small Business Taxes

Filing your business taxes can feel like an uphill battle at times, especially if you are not familiar with the tax laws for doing so. Luckily, we have gone through this process several times already for you!

In fact, our team has published a number of articles about how to file small business taxes, which makes it easy for you to start from scratch or refresh your knowledge of the rules.

We also cover some basic steps such as when to do annual versus quarterly filings, who needs to be included in the return, etc. To make sure all your paperwork is organized and within reach, check out our tips here.

Register your business

how to file small business taxes

As with any new business, registering your LLC or ITA is an important first step. You will need this information for most tax filing deadlines as well as for doing business under your company name. Some states require you to be registered before you can employ anyone so make sure to do that early!
As mentioned earlier, choosing your business structure depends mostly on what level of liability you want to assume. Just like individuals, every small business has owners who are liable for their actions. This could include shareholders in a corporation, partners in a partnership, or just one individual owner in an LLC.

In all three cases, the individuals behind the business must file personal income taxes as well as corporate income taxes depending on if they earn more than $50k per year or not. If they do not, then they can choose to be taxed as a Sole Proprietor which does not require them to add additional paperwork.

This article will go into greater detail about each type of business form and how to set up yours, but overall it’s good to know that you are responsible for your business decisions and what products and services you offer.

Businesses come with legal responsibilities too – from employment laws to withholding obligations- and it is your duty as an entrepreneur to be aware of these.

File your tax return

how to file small business taxes

The very first thing you should do is file your business taxes! This could be done through an online service or by filling out paper forms yourself (though most people use software these days to help with this).

Most individuals can choose to have their own account, whether it’s for personal income taxes or sales taxes. Sales tax accounts are usually easier to manage because there’t too many deductions like in personal taxes.

But don’t worry about getting everything right the first time. Because even though filing taxes may feel overwhelming at times, you’re not risking much money unless you make serious errors.

In fact, only 5% of small businesses that filed returns were given a penalty for underreporting or omitting information, according to research conducted by CPA firms.

Pay your tax bill

how to file small business taxes

The process of filing small business taxes is quite complicated, but you can definitely hire professionals for it. There are many sites with info about self-paid taxes, so instead of trying to figure it out yourself, save some money by looking into it!

In fact, most large businesses have their own internal systems that help them file these taxes quickly and easily. They probably use the same software as you do!

By hiring professional services, they likely take care of all the paperwork and deadlines for you. This saves you time which you can spend doing other things like working or spending time with your family.

There is an additional cost involved in paying someone else to handle this work, but very few people survive on pure passion alone without adequate funding.

Keep your financial records

how to file small business taxes

Now that you’ve filed all of your personal taxes, it is time to move onto the next step which is ensuring that your business files its tax returns as well!
As mentioned before, keeping proper documents and notes is very important when filing for business income taxes.

These documents include receipts, invoices, and other pertinent information such as contracts or agreements. It is also essential to keep track of what you pay to maintain your business and run specific operations (utilities, office supplies, etc.).

When investing in new equipment or software, make sure to save documentation about the purchase. This includes proof of ownership, license terms, and source materials.

Likewise, ensure that you have adequate insurance coverage by comparing prices and types across vendors and areas of the country.

Create a business plan

how to file small business taxes

The first step in filing your small business taxes is creating a business plan. This will help you determine if you are eligible for any special tax breaks, as well as identify all of the entities that make up your business.

You can use the internet or talk with friends and family to get some basic information about starting a business, but it is not enough!

It’s very important to do your research by talking to people who have done similar things before, looking at online resources like Tax Forms and Systems and reading through various tutorials and how-to guides.

There are many free tools available to help you organize all of this information, so don’t feel like you need to pay money to learn how to file your business taxes.

Know your laws

how to file small business taxes

The first step in filing small business taxes is making sure you understand the tax law. You will need to know who gets taxed, how much they are taxed, when these deadlines are, and what types of documents and proof you must have for this information.

There are several different agencies that collect income tax as well as sales tax from businesses. Each state has their own collection agency or group of agents that oversee business and individual income tax. Some states also have separate agencies that handle payroll taxes such as employer’s national health insurance (OHI) or unemployment (UI).

Each of these agencies sets its own requirements and deadlines for when all necessary paperwork must be filed. Getting this info before starting to file can save you a lot of time once it is completed. Ways to get this knowledge include looking at past forms and filings, talking to others with similar experiences, and reading up on the internet and books.

Remember, even if you aren’t required to do so, it is good practice to keep back-up documentation and proofs. This way you don’t risk having to reenter inaccurate data due to lack of evidence.

Document your business

how to file small business taxes

The very first thing you need to do in order to file small business taxes is to document your business! This includes keeping receipts, invoices, etc., as well as documenting changes to the structure of your business.

For example, if you acquired or started sharing an account with other individuals or businesses, then you will have to re-file self-employment income tax returns along with individual tax returns for those employees.

This can get tricky because it may be hard to source these documents and know what information you are allowed to include when filing.

We recommend using TaxTools’ free eTax software to log all of your business expenses. It has built-in tips that help you identify which types of documentation you should use to prove each item.

Pick your tax accountant

how to file small business taxes

There are many good accounting firms that do small business taxes, so before you pick anyone to help you with this task, make sure you know what services they offer and how much experience they have doing these types of things.

It is very important to choose an experienced professional who can answer all of your questions thoroughly and easily. An inexperienced person could potentially put yours or others’ money in danger by making a mistake!

Tax professionals must pass rigorous examinations as well as state certification requirements before being allowed to represent individuals or businesses in personal or business income taxation. It is the taxpayer’s responsibility to ensure their representative is legally able to act on behalf of the client.

About The Author

Tiara Ogabang
Tiara Joan Ogabang is a talented content writer and marketing expert, currently working for the innovative company With a passion for writing and a keen eye for detail, Tiara has quickly become an integral part of the team, helping to drive engagement and build brand awareness through her creative and engaging content.
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