There are many different ways to file your taxes online when you run a small business. To start off, it matters whether you run the business entirely as a sole proprietorship, if you have an LLC or if you have fully incorporated.
You’ll likely need to use a different tax form depending on the corporate structure that you chose, but in any case, you will need to calculate and report your taxable business income.
At Picnic Tax, our online accountants can prepare your business taxes online, whether you have a partnership, own a corporation, have an LLC or are a sole proprietor.
When you provide your documents, our experienced CPAs can handle the filings for you, so that you don’t have to navigate through the often-confusing realm of business tax forms. Whether you’re turning to professional help or trying to go it alone, here are some key items to keep in mind when preparing your small business taxes.
Keep Your Records Handy
Your business records are essential to an accurate small business tax filing. You should make sure to have all of your relevant documents that report income and expenses for your business. If you use a spreadsheet or accounting program to track your expenses, you can make use of this during the tax preparation process, but it is also good to have the original documents on hand. If the IRS has any questions, your original documents are an invaluable resource and backup for you.
Here are some of the records to have on hand when preparing to file your business taxes:
- Personal data, like your Social Security number, date of birth, address, etc.
- Prior tax returns for your business and personal taxes
- The business’ Employer Identification Number (EIN). If you do not use your EIN regularly, you can look it up at the IRS website.
- Earnings-related documents, including records of goods sold, sales receipts and invoices your company sent out to clients
- Expenses-related documents, such as wage and salary documents, meal and entertainment expenses, mileage information, office supply receipts, rent information, benefits and insurance documents
Make Sure Your Forms Are Correct
If you are reporting taxes for your small business, make sure that you find the right tax form for your needs. In all cases, you need to report your earnings and pay the taxes that you owe, but the methods of calculating and their proper reporting can vary.
You may have a sole proprietorship. In this case, you can report your income on a Schedule C, attached to your regular IRS Form 1040. You can also use this schedule if you have a single-member LLC.
However, if you have established a corporation or have an LLC that is to be treated as one, you will need to file IRS Form 1120 with your corporate tax return.
If you have a multiple-member LLC, that is to be treated as a partnership, you will need to file IRS Form 1065. Each member of the LLC will get a Schedule K-1, which will document your share of the profits or losses of the LLC for the tax year. The data from that schedule can be entered into your IRS 1040.
If you are filing your taxes yourself, Schedule C is easier to use, as it is designed for individuals. You may be able to use the IRS Free File program to file your taxes if you made less than $66,000, although many free online programs are meant only for those with traditional employment income.
They do not provide the detailed information necessary for business owners to complete their taxes, even if you have a low income from a new company. Because you are self-employed, you will also need to deal with self-employment taxes in addition to your regular income taxes.
Complete Your Forms
Whether you are using Schedule C or completing Form 1120, you will need to enter your business expenses and income to determine net profits or losses.
Schedule C is only two pages long and provides a list of the eligible expenses for deduction; the final number is then transferred to your personal tax return. Form 1120 requires additional detailed information, as it is used for larger companies as well as small businesses.
Form 1065 and Form 1120 are more complicated, and most people turn to a tax professional for support with these documents. The online accountants at Picnic Tax are experienced in helping small businesses to complete their tax obligations in a correct, prompt and timely manner.
Make Sure to Be On Time
There are different filing deadlines for some types of business taxes. In most cases, you can easily get an extension, but it is also important to prepare for this in advance. Schedule C reports are due on April 15 with the rest of your IRS Form 1040, while Form 1120 is due for C Corporations on the 15th day of the fourth month after the end of the tax year. In most cases, this is April 15, as most corporations have the regular year as their tax year.
However, S Corporations use Form 1120S, which must be filed by the 15th day of the third month after the end of the tax year; in most cases, this is March 15. Form 1065 for multiple-member LLCs run as partnerships must also be filed by March 15.
Forms 1065, 1120 or 1120S should be submitted separately, not attached to your personal tax return.
If you find that you are unable to meet the deadline for your filing, apply for an extension. This does not give you extra time to pay taxes owing; you will still need to pay those before the deadline. However, you can get extra time to submit your IRS forms, which can be important if your documents are not fully in order. Depending on whether you need to pay personal or business taxes, you can use the IRS Payments Gateway or the Electronic Federal Tax Payment System.
File Your Taxes Online
Over 90% of Americans file their taxes online, and the proportion is only growing with time. You don’t have to use paper forms or line up at the post office on tax day to submit your forms online.
There are a number of software programs designed to help people file their taxes more easily, but these may not be sufficient for people with complex streams of income. If you need help from a tax professional, you don’t have to go to a brick-and-mortar office for an appointment.
Picnic Tax helps you get support from a skilled, qualified accountant. We match you with a vetted tax professional familiar with your area of work. All you need to do is submit your documents online, and your tax professional will do the rest.
After you sign off on your documents, your online accountant will efile them with the IRS. You can feel confident that a knowledgeable accountant prepared your business taxes and that you are accessing your maximum deductions and credits, all for a clear, fixed price. Find out more today about how Picnic Tax can help you save on your small business tax filings.