Tax season may be wrapping up, but now’s a great time to review your financial organization tactics before you file away your information until next year. Doing your taxes—especially if you’re a small business owner—can be a stressful time, so having a solid rundown to refer to can be a big help. You’re always required to report your business earnings to the IRS and pay tax on every dollar, but this process doesn’t need to be overwhelming. Let’s look at a few things you need to know to make taxes a much friendlier part of your annual routine.
Breaking down the basics of filing business taxes with financial organization
Organized records are key
Whether it’s tax season or not, your business records need to be current and orderly. You’ll have an easier time with gathering it when it’s time to file, and you’ll also have a more direct hand in catching any errors while they’re small. For all online bookkeeping and manual or paper records, keeping a solid information trail for all expenses, transactions, donations, and anything else you do in your business is a best practice you don’t want to overlook. Using a year-round approach to financial organization makes tax time a lot less stressful.
Make sure you’re using the right form
It matters if you’re an independent contractor, sole proprietorship, an LLC, a corporation, or an LLC treated as a corporation. You need to correctly report your income to the IRS, and these forms can be downloaded directly from the website here.
Sole proprietorship: report all of their business income and expenses on a Schedule C attachment to their personal income tax return.
LLC/sole owner: the IRS considers this a sole proprietorship, use Schedule C attachment.
Corporation (or you treat your LLC as one): Form 1120 for C-Corporations or Form 1120S for S-Corporations. For multiple LLCs considered partnerships, file Form 1065.
Use all available resources
Remember that there are a lot of tools designed to simplify taxes so that you don’t have to spend a large amount of time preparing and filing each year. Accuracy is essential, and so is getting a good handle on the process. Online accounting tools, online filing programs, and qualified financial professionals are ready and able to help you out. Reach out to me if you are looking for referrals or tech recommendations.
Wrapping up another successful tax season
Your business taxes and personal taxes may be a permanent part of annual operations, but I promise you that it doesn’t have to feel like climbing Mount Everest. If you’re looking for a virtual CFO to help with financial organization, bookkeeping, and financial analysis to help you organize your business finances throughout the year, reach out to me anytime.