Tax preparation for businesses

Elizabeth Rosen
by Elizabeth Rosen, Contributor

 

If you are a self-employed individual or the owner of a small business with no employees, you can file your business taxes along with your personal income taxes. However, paying taxes on a larger business with employees is more complicated and may necessitate more in the way of tax preparation.

Business taxes often require tax preparation to occur quarterly, not just once a year. If your business is large enough to have a payroll department or employ an outside payroll service, they will often take care of payroll tax preparation for you (and will either bill you throughout the year or charge a flat annual fee).

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If filing business taxes on your own, you could consider using an online tax preparation service. This may be your quickest and easiest option for tax preparation, as well as being relatively inexpensive. However, tax preparation software cannot substitute the personal service and advice that a CPA or tax professional can provide.

In order to go about your business tax preparation properly, you will need to be diligent about keeping accurate records. You will be required to provide information such as your Federal Tax ID number, the date your business was incorporated, and your businesses income and/or losses for the year. If applicable, the number of shareholders in your company and the size of each shareholder’s ownership stake are important figures as well.

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Most of the information you need for tax preparation will be available on the articles of incorporation that you created when you started the business. If a partnership agreement exists, you can look at that agreement for details such as how much money each business partner initially put into the company.

The most important tax preparation records (as far as the IRS is concerned) are the documents that show your income and expenses for the year. Have a balance sheet ready, as well as a statement of your company’s profits and losses. If you had significant losses, you may be able to claim a tax deduction on your gains. Make sure to keep records of any assets the business has purchased ― if they depreciate, you may be able to claim them as tax write-offs. You should also maintain any records of vehicles that are owned by the business, as well as any tax-deductible mileage.

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If you have been lax about keeping the records needed for successful tax preparation, there’s a chance you may be able to fall back on your electronic bank statements and credit card statements. You can check to see if your credit card company will issue you a detailed statement of expenditures.

Having all of this information on-file will help you get ready for the tax preparation process, and eliminate some of the stress that comes with filing your business taxes each year.