Tax season can seem like an ominous task, looming in the back of a business owner’s mind. There’s many questions that appear to go unanswered. How much will I have to pay? What dates do I need to remember? What forms must I fill out? Luckily, we have a few tips that will help you out as you navigate this upcoming tax season.
Types of Taxes You’ll Pay
- Self-Employment Tax: This tax covers Social Security and Medicare and applies to workers who are self-employed. If you receive income from services that you individually charge clients for, services that you sell, or income from renting out property that you own, you qualify for this tax. More information about Tax form 1040 can be found here.
- Income Tax: Running a business will require you to pay income tax, both on your salary and any profits. Income tax is what is used to fund public services, and applies to corporations, partnerships, small businesses, and those who are self-employed.
- Employment Taxes: Similar to self-employment taxes, this tax is used to cover for half of your workers Social Security and Medicare. Upon hiring your workers, they’ll fill out a W4 form, which will help you calculate which part of their paycheck will be withheld in order to cover for the other half of their taxes.
Forms to Remember
We’ve listed out some of the most common forms used by business owners. Every business is unique however, and you may find that you’ll employ forms not included on this list.
- 1040: This is your individual income tax return form.
- Schedule C: Part of the 1040 form, this form charts profits and loss and is where your income will be tallied.
- Schedule SE: A different part of the 1040 form, this is used to calculate your self-employment tax.
- 1099-MISC: This is a form your client(s) will need to fill out if they paid you over $600. The amount of forms you receive could be different; if you only have one client, you could receive only one, if you have multiple, prepare to receive many.
While keeping track of these forms, it’s important to keep track of all of your records and payments. If you employ a bookkeeper, they should have access to all of these, but if you do your books yourself, take care to organize and hold onto proof of payments and expenses.
Types of Documents Needed
- Gross receipts and invoices: Calculating these will track your total income for the year.
- Inventory records: Whatever your company purchased, you’ll need the records to deduct costs for your Schedule C form.
- Bank and credit card statements: You can identify your income and business deductions throughout the year.
- Business expense receipts: While tracking all your deductions, it helps to have the actual receipts. For any fees, services, or repairs, keep a booklet of receipts to prove the costs of each deduction.
- Payroll Documents: These will be used to track wages, as well as the taxes that come with them.
- Previous Tax Returns: If you’ve completed your taxes in the past, pulling up old documents can help navigate this year’s return.
Need Help Filing Taxes?
When it comes to actually filing the taxes, you’ll have to decide whether you want to take the time to do them yourself or hire a professional. At All About Businesses, we’re pros at bookkeeping and accounting and will help file your taxes efficiently and on time, saving you stress!
Give yourself and your accountant time before filing. Filing for taxes can never have a predictable timeline, and it’s important to get them done before April 18th to avoid having to file for a late extension. Getting ahead of the game will help both you and your accountant, giving you plenty of time to meet the deadline.
We hope this quick overview was able to help you out. For more questions, or if you’re interested in hiring a bookkeeper or accountant for late tax preparation, or for the year ahead, don’t hesitate to call now! Our virtual bookkeepers can’t wait to be of service to you!