How to File Small Business Taxes
Written by Eddy Hood
If you own a small business, one of your greatest bookkeeping fears might be how to file taxes. Depending on the type of company you own, filing taxes can range from being a simple task to an overwhelming one. Whether you go about filing business taxes online or doing it the old-fashioned way on paper, it can be intimidating either way. To help alleviate your anxiety, here are some important points to keep in mind when it comes to how to file small business taxes.
Filing Small Business Taxes Correctly
Getting a notice from the IRS after you've filed your taxes can be cause for panic. Since the IRS has the right to penalize you for incorrect information, the simplest of mistakes can end up costing your company. You can avoid this situation if you know how to file small business taxes correctly. To ensure you don't ever get penalized by the IRS, you will want to pay special attention to the following when filing your taxes:
- Make sure you are using the correct forms
- Make sure you file on time
- Make sure you don't underpay your estimated taxes
Paying attention to these three rules will decrease the likelihood of getting that dreaded IRS notice in the mail. If you have made an error and need to make a correction, you can download the appropriate forms online. Many companies utilize online business tax filing, which can help decrease the number of errors.
Understanding Sales Tax
If you are a small business that sells products or goods, you will need to understand how sales tax works. If you live in one of the following states, you do not have to worry about federal sales tax:
- New Hampshire
Since all other states have their own sales tax laws and exemptions, it is important to be familiar with the sales tax laws in your state. If you sell products or goods, you will need to have a sales tax permit that is visible in your place of business. If you are an online retailer, sales taxes must be collected when selling products to a customer in the state in which you are based.
Understanding Estimated Taxes
Small business owners are normally required to pay estimated taxes. This is the case if you expect to owe $1,000 or more when you file your tax return. If you end up needing to pay estimated taxes, you can look at your prior year's income, deductions, credits, and federal tax return as a guideline. You can try to estimate how much income you will be making in the current year. You will need to pay estimated taxes four times a year.
Online Tax Filing
Many companies are taking advantage of online business tax filing but some still prefer to do it the old-fashioned way by mailing in the actual forms. If you are finding both of these ways to be headaches, you may want to take advantage of outsourced accounting. Going this route will provide you with your very own virtual accounting firm. Ignite Spot's services include filing business taxes online. Contact us today to find out how we can help!
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