Did you recently start your own small business and will be filing taxes for that business for the first time? If so, it will help to know some tips as you get ready to file.
Review Your Income And Expense Records
You should start the year by looking through your record-keeping books for all of your income and expenses. You will want to ensure that everything is accurate and you are not missing anything from these crucial records. However, your organization throughout the year is going to play a big part in how easy or difficult it is to do this.
For income, it is best to keep track of it all by limiting the number of bank accounts that you use for business income. Ideally, you'll want to use a single bank account strictly for income deposits so that you can quickly take a look over the past year and not have to sort out other items. You'll want to cross reference these deposits with your invoices so that you know everything matches up and you are not missing anything.
Expenses can be done in a similar manner. However, know that it can be very easy to make the mistake of confusing personal expenses with business expenses. It is best to have a credit card and checking account that is used specifically for business purposes and is totally separate from your personal accounts. This allows you to easily review your receipts with the purchases made from these accounts and make sure everything is accounted for.
If it's too overwhelming to do this at the end of the year, consider a quarterly review of your income and expenses while it is all fresh in your mind.
Fill Out Proper Forms For Employees
All your company employees will need the appropriate tax form filled out and submitted on their behalf that indicates who the person is, how much they received in wages, and how much was withheld from their paychecks for taxes. A different tax form will need to be filled out and submitted for all of the independent contractors and other small businesses that you paid within the previous tax year. You'll need to provide information about who they are and how much you paid them since taxes are not withheld for these workers and companies.
With these two steps taken care of, you'll be taking care of the basic steps needed to prepare for your small business taxes.
Contact an accountant to learn more about income tax prep for businesses.