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Every year when it is April, it is time for filing small business tax return. Filing small business tax return as per the federal law and most state governments’ requirement is one of the essential things for any entrepreneur. The department of revenue of each state determines their own requirements as well as the requirement of federal government and all the taxes have to be filed with IRS before April 15th of every year.
Things to Consider
The penalties and surcharges can make a real dent in the profits if tax returns are not filed accurately and in time. The best way is to keep proper financial records and have an accurate record keeping track of every invoice and expense as and when they occur. VAT is also taken into account. Filing a small business tax return can be an exacting and meticulous job, but it is a very essential task and not very difficult one.
It is best to read the form in entirety and pay attention to all details and file the tax return without any error. You must take notice of what line of items are to be filled and what are the details to be filled like nature of business, location etc. You should make the account chart reflect the exact categories of income and expenses and other details. Even if you have the financial statement in the accrual basis, tax return can be prepared on cash basis if that suits your business the best.
You should decide on which depreciation method to use as sometimes a slower depreciation may work out better ultimately. If you have a home office, you can decide on getting a tax deduction. This can be a complex issue and so should be decided carefully. Also you should include the automobile expense log to keep track of business-oriented trips, expenses etc. Also it is essential to include the social security and Medicare taxes which will be included in the quarterly estimates.
Where to File Your Tax Return
Where to file is a question that can cause some confusion as there are different types of returns and each has a different addressee. Depending on the type of return, each form will have a unique link with a number or an alphanumerical and that will help you to file each of them addressed correctly. There are very good guidelines for each of them.
When and How to File Return
Use the budgetary allocated funds for payment of taxes. But even if you do not pay in total what you owe to IRS, it is no reason not to file the tax return, or pay in part at least of what you owe to IRS. You can always request for additional time to pay in full or in installments.
If you have staff employed or if you have agents like contractors for getting the work done, there are monthly NIC/IT deductions which all have to be filed up in pay-roll information etc. Get the W-9 forms to be filled, and you should give the 1099-MISC forms to them as well as to the IRS.
Filing tax returns electronically (online) is considered better as it gives you more time to file the tax return and pay what is owed as taxes. There will be a perjury statement just above the signature line which must not be crossed out or whitened or tampered in any way.
It is estimated that more than 1.7 million penalty notices are issued when this requirement is not followed by entrepreneurs irrespective of the size of their business. So it is best that the tax returns are filed accurately and in time to get the most beneficial results for your business.
