income-tax

6 Tips for Small Businesses to Survive Tax Season

Besides self-improving resolutions, the beginning of a new year inevitably brings a less than welcome “gift” to small business owners: tax season.

 

Is it that time of the year again?

 

Before you let despair get the better of you, check out our tips on surviving tax season, and learn how to ace your tax returns. They could save your life, and your wallet.

 
 

Prepare Yourself

 

Don’t wait until the last minute to file your taxes. Start thinking about it well ahead of time, and collect all business documents you’ll need

 

Don’t wait until the last minute to file your taxes. Start thinking about it well ahead of time, and collect all business documents you’ll need.

 

These include:

 

  • Your Profit and Loss (P&L) Statement.This sheet compares your earnings and your expenses, showing your net profit (or loss) over the course of the tax year. Remember to include any income you earned as a contractor, and deduct your credits and returns.
  • Calculate the costs of the goods you sold (if applicable). For this, you need to take into account your yearly beginning (January 1) and ending (December 31) inventory, as well as the cost of labor and anything you may have purchased during the year.
  • Your business expenses. Include everything from utility bills, travel expenses, business debts, cost of supplies, etc. Bear in mind that while you don’t actually have to include the bills for these expenses with your tax returns, you may have to show them to the IRS if you’re audited.
  • Records of your business assets. These include business vehicles, building, any copyrights you own, etc.

 

 
 

Know Your Dates

 

Don’t be ambushed by deadlines creeping up on you. Here’s a table containing this season’s deadlines.

 

Type of Tax FormDeadline
Partnership returns on Form 1065 with Schedule K-1sMarch 15
Multiple-member LLC returns on Form 1065 with Schedule K-1 isMarch 15
S corporation returns on Form 1120 SMarch 15
C corporation returns on Form 1120 (if your fiscal year ends on December 31)April 17
C corporation returns on Form 1120 (if your fiscal year ends on June 30)September 15
Sole Proprietorship and Single-member LLC returns on Schedule CApril 17

 

Know Your Tax Forms

 

Choosing the right tax form is the first step of filing your taxes, and it’s not as easy as it sounds. Depending on the legal entity of your small business, you may need the form for sole proprietorships, partnerships, corporations, or S corporations.

 

Limited liability companies (LLC) pay taxes according to their structure. If the LLC is owned by one member, the rules for sole proprietors apply. If two or more members form your LLC, you need to follow the rules set out for partnerships.

 

Sole proprietors file their returns together with their personal returns on Schedule C, Form 1040. Corporations use Form 1120, S corporations need Form 1120S, while partnerships file Form 1065.

 

Unfortunately, filing your income tax won’t get you off the hook (in most cases). Depending on your business’ legal entity and your earnings, you may need to file various other types of taxes.

 

Know What You’re Filing

 

Unfortunately, filing your income tax won’t get you off the hook (in most cases). Depending on your business’ legal entity and your earnings, you may need to file various other types of taxes.

 

These include (among many others) self-employment tax (if you’re a sole proprietor), employment taxes, and estimated taxes. Many small businesses pay estimated taxes during the year if they expect to owe more than $1000 at the time of filing their taxes.

 
 

Get Professional Help

 
tax-advisor
 

This does sound complicated and we understand if you feel like you’re in way over your head. Paying extra for getting something wrong is nobody’s dream.

 

And anyway, who wants to do more paperwork?

 

In that case, hiring a tax advisor is the way to go. Read our article that helps you determine whether you need a tax advisor or filing your taxes by yourself is your best option.

 
 

Choose the Easiest Payment Option

 

The IRS has the option of paying your taxes online through their website, either via credit/debit card, or via direct payment.

 

You can also use the Electronic Federal Tax Payment System, or alternatively, opt for more conservative options like bank wire, cheques, or even cash.

 

But why wait around when you can get it settled with a few clicks? When you hit “Enter” the final time, you can lean back in your chair and forget about your taxes for a whole year. Sounds like heaven.

 

If only business payments could be easy as that. Oh wait. They are!

 

With Veem, you can settle all your international B2B payments with a few clicks of your mouse. Due to a unique multi-rail technology, Veem creates a direct connection between you and your business partners, allowing you to send and receive payments easily and securely.


7-05

 

Veem cuts out the middlemen, which means no hidden costs and no unforeseen delays. In addition, Veem offers competitive foreign exchange rates and charges no wire fees.

 

What’s not to love?

 

Sign up for your free Veem account and enjoy easy international payments.