Make Tax Time Easy: A Must-Read U S Small Business Tax Checklist

business tax preparation checklist

Bookkeeping Let a professional handle your small business’ books. Finances Spruce Mobile banking for people who want to be good with money. One last thing to note is to make sure that you keep all of your receipts and records to be able to back up these deductions in the event of an audit. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market.

  • To use this method, you’ll need to do a little calculation to see how much of your home is a home office.
  • We’ve all experienced big changes because of the pandemic, and no doubt you’re still recovering from some of them.
  • Often, receipts are sufficient to document expenses.
  • Merchant Maverick’s ratings are editorial in nature, and are not aggregated from user reviews.
  • This is easy to do online, or you can ask your tax preparer to make the request on your behalf.
  • Plus, when your accountant—or the IRS—is looking for something specific, it’s just a matter of a few taps to bring it up.

However, it’s important that you keep track of when payments are due and when taxes need to be filed. Unfortunately, the IRS doesn’t take tardiness or failure to pay lightly. As a business owner, you are likely considered an employee at your own company. If you personally earned more than $400 from business activities, it should be reported as income and paid at the self-employment tax rate. The current self-employment tax rate is a flat 15.3%. That breaks down to 12.4% for Social Security and 2.9% for Medicare, since there is no employer responsible for paying these on your behalf. Most accounting software companies offer some degree of tax support.

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These taxes aren’t withheld from the employee’s pay — the employer pays them from their own funds. Information on unemployment tax compliance can also be found in IRS Publication 15. Tax planning for small businesses does not have to be difficult, but as your business grows, so will your concerns. Most businesses will require the services of a skilled accountant at some point during their development, and if you haven’t done so already, now is the time to start thinking about it. Perhaps a starting point would be this free new tax law report.

business tax preparation checklist

If you’ve already begun to think about business tax preparation, you’re likely ahead of the game, but there are times when an extension may be necessary. The new year can be a busy time for small businesses and finding the time to get prepared for tax filing can seem like a chore in itself. Rocket Lawyer understands the stress that might come with doing your taxes and we are here to business tax preparation checklist help. That is why we have put together an easy checklist to help you and your business get on track and prepared for tax season. If you have questions about which forms to file or how to fill them out, it may benefit you to speak with a tax professional. While tax software may be useful, a dedicated tax preparer can be more reliable in helping ensure you file correctly and on time.

Imperato Tax Services, Inc. find the nearest participating office or to make an appointment. By now, you know all the necessary information you need about how to create your small business tax checklist. Just make sure to stick by it when gathering all the important documentation regarding your tax returns, tax deductions, or the tax credit you’re eligible for. A final piece of advice would be to respect the tax return deadline and prepare your documentation on time.

Ideally, you’ll want to choose a financial professional who has experience working with businesses like yours. You can do a lot of the preliminary work, of course, if you’re so inclined—but before you commit and send, you should verify that everything you’ve done is accurate. Mileage expenses are among the common small business tax questions. For a trip to be considered business travel, it must be typical, necessary, and away from your tax home, which is the city or area where you conduct business. You must travel for more than a day away from your tax home in order for this to apply.

Get ready to file your small business taxes with the IRS

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Some of this material was developed and produced by FMG Suite to provide information on a topic that may be of interest.

When tax time comes around, you can take a deduction for the miles driven. Ideally, you should input your mileage each time you drive.

You can prepare your own small business taxes

However, there are some situations where meals are 100% deductible. For example, if you provide snacks for your employees in the office, that’s going to be 100% deductible on your tax return. If that’s incorrectly categorized as just meals, your tax preparer might just give you a 50% deduction for that. H&R Block online tax preparation and Tax Pro Review prices are ultimately determined at the time of print or e-file.

business tax preparation checklist

Overpaying isn’t a huge problem from the standpoint of the IRS. However, if your business is cash-intensive, then paying too much in taxes could force you to have to borrow more during the year, costing you more in interest and finance charges. Many expenses, such as insurance, overhead costs, supplies, utilities, and professional fees, don’t involve a lot of extra documentation.

Employment and vendor tax documentation:

State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to them. For current tax or legal advice, please consult with an accountant or an attorney. Be sure to calculate these taxes as part of your total estimated taxes when paying quarterly estimates. We know that some business owners just LOVE doing their own taxes, but in a year like this, where nothing is as it was before, working with an accountant is probably a very good idea.

Legal information and other services are delivered by or through Rocket Lawyer via Most business will use Form 7004 to apply for an extension. However, if your business activity are being reported on your personal tax return, you will want to use Form 4868.

But if you’ve missed a few or are a little behind on your mileage tracking, now’s the time to update it before you get to work filing your taxes. Even better if you can find a tax professional that specializes in your niche. For example, there are those who specialize in serving the needs of small business owners, or freelancers operating exclusively in the creative industry. If you don’t have a tax preparer lined up yet, it’s a good idea to start interviewing some well before tax season begins. Great tax preparers get busy and booked with their clients.

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