Business Tax Preparation 101

Business Tax Preparation 101 – Basic Knowledge to Prepare Annual Business Tax

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Business Tax Preparation 101 – Basic Knowledge to Prepare Annual Business TaxOnce tax season comes, all people need to prepare their taxes. These include employees and business owners. Many businessmen don’t even know how to file the tax properly, so they choose to hire an expert to work on business tax preparation.

Business Tax Preparation 101

Others decide to prepare and do the job alone, especially during the first quarter of the year when the tax preparation heats up for corporations. Many things are involved in this activity. These include paperwork organization and reporting both incomes and expenses.

Also read : Taking Advantage of Your Deductible IRA Contributions

Things to Learn

One thing that you need to be sure of is the early plan. Don’t wait until April 15, as your business tax obligations become more hectic day by day. You should plan smart when preparing to file a business tax return.

Paperwork organization

The best time to plan is in the first month of the year (January). Many big companies do this, as they begin sending out and receiving major tax documents at that time. Therefore, your business should be ready early related to paperwork organization.

Regardless of the size of your organization, you must plan and start ahead. This way, your business can avoid the final minute rush. It doesn’t matter whether you want to plan this alone or by getting help from a tax professional.

Hiring a Tax Expert

For small businesses or those who don’t have experience related to business tax preparation, it is recommended to hire a tax preparer or expert. If you are working with this service, he may ask for some documents.

For instance, you need to provide him with your identity proof. If he is preparing taxes on behalf of your company, you must provide your tax ID. Aside from those basic documents, this person needs to understand your business finances.

This explains why you should provide him with gross receipts from sales, returns, sales records, interests, and other types of income. Is that all? He also needs access to the information related to your business expenses.

By knowing details of your business costs, he can determine which ones are qualified for credits and deductions that reduce the overall tax liability of your company. Thus, you should provide any information that he needs.

Filing Business Taxes

After the preparation, you only need to file the taxes. When can you do it? According to the IRS, all business owners can start filing their taxes at the end of January. To be exact, the IRS accepts and processes federal tax returns starting from January 27.

The good news is you can work on business tax returns as early as you want, whether you work alone or with a tax expert. Some businessmen even use expensive tax software to work on business tax preparation. One thing, the IRS won’t inspect and process these until the start date.

Also read : Understanding Business Write-Offs and How to Make One

Learn Your Business’ Qualified Credits and Deductions

The most terrible mistake made by business owners when preparing their annual tax is neglecting the tax deductions opportunity. This becomes a critical part of the filing process. Taking advantage of credits and deductions reduce overall tax obligations!

You may find many types of business tax reductions and may or may not qualify all of them. Simply visit the IRS website to find the complete list of those write-offs and various business industries to where the deductions can be applied to.

Different types of businesses have distinct access to income deductions. Once qualified, your business can claim it. The qualification is simple. The income of your business should come from a business or trade. These don’t include interest, capital gains, employee wages, and dividend income.

Aside from that, you can take advantage of the latest tax laws. Many reforms and reductions have been made to the tax code since the occurrence of the 2017 Tax Cuts and Jobs Acts. These impact businesses and business tax preparation.

The law is complex, so you need to read them thoroughly. The IRS even offers guidance about these, so you need to take advantage of it.

Also read : Basic Guidelines about 179 Tax Deduction

Business Expenses Itemization 

One of the best methods to avoid hassles and save time before tax day is to itemize your business expenses. That means you need to have details and categories regarding any costs in your company.

The simplest way to do this is by working with accounting and bookkeeping teams. If your business is small, you can do this task alone or with your spouse. As an alternative, you can hire a tax expert or other outside helps.

The best part is that the IRS offers a certain service that details or itemizes the type of business expenses that you can claim. It’s OK to take advantage of this help.

Working on Projected Payroll Taxes

Business deductions, incomes, and expenses are not the only important things you can work on when preparing an annual tax report. The projected payroll taxes include in it. These should be calculated well and up to date, as a part of tax payment schedule estimation.

Your business can get a special benefit from an IRS installment plan as long as it is eligible to pay its payroll taxes. The qualification is simple, which states that you need to owe below $25,000 in combined interest, penalties, and tax, and filed all needed returns.

If you are not sure about it, visit the IRS website for further explanations and details. There you can learn how to apply for the payment plan and business tax preparation.

Also read : Learning Alternative Minimum Tax (AMT) and How to Reduce It

Important Tasks to Complete

When preparing a business tax, you must do several important tasks. Make sure that you complete all these:

  • File Form W-2 and Form W-3
  • File Form 1099-NEC and Form 1096
  • File state and federal payroll returns

Aside from those tasks above, you need to provide additional related information like:

  • Completed year-end books
  • Information about NOLs
  • Information about any charitable contributions

Reasons to Hire Tax Expert

To avoid any hassles, you can simply hire a tax expert. He will do all the jobs for you, as long as he gets enough information related to your business and personal identity. These are the reasons to hire him:

100% accuracy

This service guarantees perfect accuracy on business taxes, payroll, and bookkeeping. He will reimburse you for interest and penalties if you make errors on the return.

Grow bottom line

This tax pro ensures to grow your business bottom line by finding out all available deductions and credits. He also ensures you track business expenses accurately.

Expertise

Years or decades of expertise in taxes is his best benefit. This service has both the knowledge and skills needed work on business tax preparation, calculation, and filing taxes.

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