Owning and operating a business, regardless of size or industry involves major decisions, one being tax filing.  Even to someone experienced, dealing with taxes can be challenging.  In addition to payroll taxes, other business taxes have to be calculated, reported, filed, and paid.  Then, if a business tax filing were ever missed, even by a single day, the company could easily be penalized.  In this case, the cost could be anywhere from $1,000 to $10,000 or more!

In this article, we wanted to provide some helpful tips and information specific to tax filing so processes are streamlined and ultimately easier.  With this, the business owner would be saved time and money.

Small Business Owner

First are issues of business tax filing for the small business owner and by following a few general rules, the process would be less painful.  The tips listed below would make tax filing a smoother process that does not consume a tremendous amount of time.

·    Organization – There has to be a system in place whereby all receipts and other documentation can be organized and maintained.  As mentioned, when tax documentation is not organized, it is easy to miss a deadline that could result in an expensive penalty.  Therefore, the small business owner needs to start by creating a filing and tickler system so everything is in one location and easy to access.

·    Computer Software – It is also highly recommended that the small business owner avoid keeping track of things on paper.  Today, too many excellent computer software programs exist that can help track everything pertaining to business tax filing and then walk the owner through the process of pulling it all together.  Additionally, most of the programs now being sold are more affordable than they were only a few years ago.

·    Deductions – A common mistake made by business owners is that most go through the tax filing process and have no clue they missed some important deductions.  Typically, this happens due to a lack of knowledge regarding the types of deductions a person can use.  One of the benefits of using a great computer software program for tax filing is that it would guide the owner through each step of the filing process and even highlight viable deductions.

·    Quarterly – It would also be beneficial for tax filing to be done quarterly rather than annually.  For one thing, this would cut down on the amount of work to be done, which in turn reduces the number of possible errors.

Home-Based Business

We also see a growing number of people working from home and in this case, tax filing would focus in a slightly different direction.  Instead of being for the small to medium company, it would be for a single person working out of his or her home, or perhaps someone with one or two employees.  Although all of the tips provided above for a small business would be used, the following are a few additional pieces of information to make tax filing easier.

·    Tax Forms – If the home-based business involves any employees, they would need to be provided with the appropriate tax forms at the end of the year so they can file personal income tax.  This would involve employees completing a W-2 and the appropriate deductions being withheld according to the information provided on that form.  At the end of the year for tax filing, employees would be provided with a W-9 or 1099 depending on the type of support offered.

·    Additionally, with a business being run in the home, there are certain expenses that can be deducted such as a portion of the electric bill, heating or air conditioning bill, phone, etc.  People can go online to find a full list of possible deductions that would be beneficial at tax filing time.

·    Then, there is tax filing for personal tax liabilities.  The exact forms used and information involved would be based on the company being operated as a C Corporation, S Corporation, Limited Liability Corporation, or a DBA, which stands for “Doing Business As”.  The way in which the business is run would dictate how the tax filing is handled each year.