Tax season can be complicated for anyone. But when you are a small or medium-sized business owner, you may find it incredibly stressful. While you can utilize the services of a tax accountant or even an attorney to make sure you have completed the process correctly, you still may have questions on the overall filing process. Clark Olson Law is here to help small businesses file income taxes.
How to File Income Taxes
When you need to file your federal income taxes as a small business owner, there are a few things you need to know. The most important thing is that the formation of your business can change how income taxes are filed.
Your business may be a sole proprietorship, corporation, partnership, etc. This becomes important to designate which type it is when filing the forms assigned to your business type.
- Sole proprietors must file Form 1040 for the individual tax return in addition to the Schedule C form, which accounts for business loss and profit.
- Corporations must file an 1120 tax form with the IRS to determine the business tax owed.
- Partnerships will file Form 1065 to report their income, gains, losses, deductions, credits, etc.
What is critical to remember is that some of these business formations are known as “pass-through” structures, meaning that they do not pay tax on income but will pass that loss or gain to partners in the company.
So how can you make the income tax filing go smoothly and ensure you’ve completed all necessary forms?
Income Taxes for Small, Medium-Sized Businesses
To file income taxes as a small or medium-sized business, there are a few steps you’ll want to follow.
#1. Keep thorough records.
There is nothing more stressful than digging through pay stubs, receipts, transaction files, deductions, etc. when it’s crunch time for tax season. No matter how or when you file, it’s important that you keep thorough records to ensure no element of your business finances is unaccounted for.
Failure to do so can result in legal headaches you simply can avoid. Utilize spreadsheets, filing systems, bookkeeping software, etc.–whatever you and your team need to keep it together.
#2 Make sure you are filing the correct forms.
If you are the founder of the business or a major partner, you likely know the specific business formation. However, if you have questions on what forms you need as an LLC, corporation, etc., it’s important to find out early on so you can avoid confusion at filing.
#3 Fill out the form(s) appropriately.
By keeping those complete and thorough records, filling out the proper tax forms should not be complicated. But if you’ve been lax on record keeping, you may need to enlist the help of an accountant, or even a tax attorney who can make sure you have not made any legal errors.
#4 Be mindful of time.
You need to be mindful of timing. Whether you are filing your income taxes alone or with the use of a tax service, you need to give yourself ample time to have it completed.
Small Business Taxes: Clark Olson Law
Taxes are complicated. Why not let the small business tax attorneys at Clark Olson Law help you through the process? We are often able to reduce or delay taxes that would be otherwise due while navigating any changes to your business structure which may have occurred. Contact us today for a free consultation. Our attorneys are here to help.