Starting a small business is fun and exciting once you get all the preparations out of the way. After months of planning, budgeting, hiring employees and getting all the brand details sorted out, there’s no better feeling than launching the ideas you’ve worked so hard to create.
But, you can’t forget to file small business taxes! Taxes can really do a number on your first year of revenue if you don’t account for them. This is especially true if you haven’t kept track of the things you’re able to deduct or if you end up being late on filing your taxes altogether.
While the former is specific to the kind of business you run and the things you spend money on, there is a simple solution to the latter: file business taxes online.
To help you figure out all the ins and outs of filing online, use the tips below!
1. Pay Attention to Your Spending
No matter how you choose to file business taxes, you need to keep track of your spending. When the end of the fiscal year rolls around, every little penny counts. This goes for every expense from the coffee you invited an associate to, to the new pieces of equipment you bought and how you plan to depreciate them.
Also, keep in mind that spending is categorized. You don’t just submit one large sum of all your expenses, the government takes a percentage of each kind of spending to calculate what you owe.
2. Keep Receipts
Sometimes, tax officials will ask you for proof of certain payments or expenses that you’ve claimed. This is why it’s imperative that you keep receipts.
Receipts are the only way you’re able to showcase that you did, in fact, purchase a certain item at a certain time. When it comes to a business tax return, think of receipts kind of like insurance on your claim. You know you’re good for your claims because you have the proof to back it up.
3. Make Earnings Projections
It’s one thing to track your spending and keep your receipts, and another to anticipate how much you’re going to earn this year. This number is about more than breaking even and planning next year’s budget – it’s what the government uses to calculate how much money you owe.
What you owe is then reduced depending on the deductibles you claim. Still, it’s better to estimate high than to guess low when calculating how much you think you’re going to need. This allows you to include tax payments into your budget so that everything goes to plan as closely as possible.
4. Figure out Your Deadlines and Forms
Another thing you should be aware of is when your taxes are actually due. Some small businesses opt to pay their taxes in installments throughout the year while others just pay everything in full before the annual due date.
Make sure you and your partners are clear about which option you want to do. If you’re a freelancer and you like the thought of installments, plan ahead and pay upfront. Otherwise, you’re going to have to sign up for a payment plan on money that’s already due, which you don’t have the option to do every year.
While you’re figuring out which deadlines apply to your business, also figure out which forms to use. Not all businesses file their taxes the same way. The forms you use will depend on how much money you made that year, the kind of business you have, and the number of employees working for your company if any.
5. Submit 1099s
If you don’t have employees working for you, chances are, you’ve hired a contractor. This may be a web designer who got your site up and running or a marketing team that handles all of your digital content and print campaigns, to give a few examples.
Contractors also include any HVAC work you had done on your office building or the builders and designers that got the building ready in the first place. Whatever is applicable to you, if it’s over $600, you have to file this form.
The sooner you do this, the better. The contractors will need it for their taxes, and you’re going to need a copy of it on file to send into the IRS.
6. Account for State Tax
Just when you think you have the tax filing process all figured out, check to see if you owe any state tax. This is applicable in some states, but not in others. If you operate a business in multiple states (or multiple countries) check and double check what your financial responsibilities are.
The last thing you want to do is pay only some of your taxes instead of paying them in full. This can result in a fine that’s larger than the amount that’s unaccounted for, which is more stress than you need to deal with.
7. Consult a Professional
Are you just feeling stressed about filing taxes in general? Whether you’re confused about which forms apply to you or you’re just not sure how to claim everything you’ve spent money on this year, you need a professional tax preparation software with bank products.
This makes the process as seamless as possible. Such a software makes it easy to identify where all your money went and can also help you project what you’re going to make, as well as how much you owe. If you’re still having trouble understanding everything, contact a real-life tax professional to walk you through it all.
How to File Business Taxes Online Made Simple: Plan Ahead!
Understanding tax preparations and payments is one of the most complex, and outright intimidating parts of being a business owner. This is why most people choose to hire a professional to take care of it. But, you can learn how to file business taxes online with a bit of patience and a lot of practice.
At the end of the day, though, you have to make sure it gets done! No matter what you choose to do, always be sure to plan ahead. Set up a meeting with an accountant well before taxes are due, or a day to deep-dive into all your expenses and form preparations.
For other financial tips and tricks as a business owner, click here.