The tax season is ever unavoidable and is often accompanied by many frustrations. Whether you are in your first business years or the tenth, tax season always gives taxpayers an endless pile of tasks that need to be completed on schedule. If you are a United States resident, this simple step-by-step guide can help you get organized and ensure that you file your yearly tax returns before due dates and without much frustration.
1. Always remember these important tax dates
This year’s taxes are due on 17th April 2017. Missing to pay your tax due on the right dates can incur you heavy penalties. Depending on the nature of the business you are running, you may have to submit certain documents to the IRS before the date. Always mark these dates on your calendar and don’t fail to act on them.
• Before 1st February – Forms 1099 and W2 Postmarked should be submitted by independent contractors or employees who earn more than $600 before on or this date.
• March 15th – this is the deadline date for filing individual and partnership tax returns.
• April 17th – the deadline for individual returns due and corporate tax returns due.
2. The tax receipts
You must get your tax receipts in order. Any missing & important tax receipts can give you a lot of inconveniences that can only create frustrations.
3. Get your accounting up-to-date
Keeping your accounting books up-to-date ensures that you can have a general outlook on the performance of your business. Many business people often turn to accounting books to defend themselves in cases of audits. You can rely on accounting software to process your business accounting figures or hire professionals to do the job. Any misreports can lead you to problems with the IRS.
4. Form 1099
If you paid an independent contractor more than $600 in the tax year, you need to send Form 1099 to your contractor and also submit a similar copy of the form to IRS before or 31st March 2017.
5. Have a detailed understanding of tax requirements
Some tax laws are very complex especially the ones that regulate large scale businesses. In some cases, you may have to hire an accountant so that you clearly get all the state and federal tax requirements. For instance, tax requirements in many States depend on a legal concept collectively referred to as nexus. The nexus requires businesses to have some physical connection to the states of operation, and that means that you can only collect tax in the state your business is operating from.
6. You can consider filing for tax extension
Tax extension doesn’t exempt you from paying certain taxes. Instead, it only gives some breathing space which you can use to get your financial plans in order. To file for an extension, you must first fill the appropriate forms that direct you to indicate the amount of tax you owe and the nature of your business. Submit the form before 15th April (or 16th March for Corporations). If you apply for an extension before the deadline, you will enjoy an automatic extension.
7. Watch out for the tax deductions
Taxes aren’t a friendly part of any business ownership. However, proper planning of a business structure can reduce any unnecessary tax deductions and open up a business for more profits.