It wasn’t easy starting your business, but you did it! It’s been a whole year since your business began. With success comes the responsibility of filing taxes each year.
There’s no need to panic about filing taxes. Read these tips for filing taxes as a small business for the first time to make this process run smoothly.
Keep Detailed Records
It can feel like it’s unnecessary to track everything all the time. However, without storing detailed records of all business conducted over the last year, you risk incorrectly filing your taxes.
Filing taxes gets complicated when you have insufficient records and make guesses on answers. You want to answer every question during your tax filing thoroughly and correctly. Some important documents to keep track of include:
- Employee wages
- Gross receipts
- Office supplies
- Advertising costs
Start the Filing Process Early
Deadlines creep up quickly when you have a business to run. When it’s your first time filing taxes, don’t miss the final filing date.
Instead, collect all the documents you might need a few months in advance and start working on the filing process. This ensures that you will send in all required documents and forms on time.
Pay Attention to Deductions
There are some tax deductions small businesses should know about to help you through the taxes process. Deductions help minimize taxable income and lower how much you’ll pay in taxes that year. That’s why keeping detailed records and knowing how your business can benefit is vital.
Some of the potential deductions include the following:
- Office supplies and furniture
- Travel expenses
- Software expenses
- Legal and professional fees
Hire a Trustworthy Accountant
Accountants can help small business owners with payroll and tax payment estimates throughout the year. When it’s challenging to try and manage the financial aspect of the business on your own, hire an accountant you trust. They are an immense help when filing taxes comes around, especially when it’s for the first time.
Use the Proper Forms
Since you’re the owner of your small business, you’re most likely filing taxes as a sole proprietorship. This means that you are the singular owner of a company and responsible for the profits, losses, and filing taxes.
As the sole proprietor, you cannot file your personal and business taxes separately. In this case, you’ll first fill out a Schedule SE for self-employment taxes. This is a Form 1040. In addition to Form 1040, you’ll also need to fill out Schedule C to file for the business’s profits and losses.
Some small businesses operate as a partnership. In this case, you would each fill out Form 1065 K-1. Then, you each would need to file Form 1040 for your personal income tax return.