Tips For Small Business Tax Preparation

Small business tax preparation is an important part of ensuring your taxes are accurate and paid on time

. Whether you are a sole proprietor, partnership or a limited liability corporation, there are certain things you should keep in mind when preparing taxes for your business.

Unlike individual tax preparation, a business will have expenses they can report on a schedule C tax form. In order to report all your expenses, you should go over this tax form and its instructions first. There are certain items a small business can take off on taxes that pertain to it. If you rent office space in a building or use a portion of your home for a home office, you can take it off in taxes. Calculating home office expenses is a little different than if you rent a space in a building. You will need to measure the office space against the measurement of the entire home. This calculation will help you determine how much your home office uses in expenses such as electricity and heat.

Small business tax preparation should start at the first of the year. For each year you should have folders to keep certain documentation such as receipts and invoices. A business credit card can help you keep track of expenditures. Everything that you purchase for your business, whether it is paper clips or gas for traveling to a client's home, can be used to offset your taxes. Your profit must also be calculated properly with small business tax preparation. Have all 1099s and any other documents providing profit statements ready when beginning the tax process.

As a small business you may need to file estimated tax payments throughout the year. There are four times each year that estimated payments are made, in April, June, September and January. You will need to keep a record of these payments so you can place them in the proper slot on next year's tax return.

If you use equipment in your small business, whether it is computers or farm equipment, you can take depreciation costs off for it. This can be a complicated process and you may want to use tax software or an accountant to help you with the calculations. If you use your own vehicle for business, you will be able to take off a portion of the expense with the standard mileage rate or by using a different calculation offered by the federal government. The decision is yours in which calculation you prefer to use for the deduction.

Many small businesses find it difficult to figure their own taxes and seek outside help to do the job for them. Whether you do the taxes yourself or hire outside help, you must have documents prepared. When hiring an outside service to do your company's taxes you will have to perform small business tax preparation in order for them to have all the correct information. These documents will need to be handed over to the accountant along with receipts and profit statements. The accountant may want to go over the items with you before he starts your tax return in case he has any questions. If you had your small business taxes performed by an accountant for a fee last year, you can take it off as a business expense the following year.

Having a small business can be rewarding, but it also means meticulous bookkeeping so your taxes will reflect correctly on your expenses and profit. Having an outside source help you fill out tax forms may be what you need especially if you aren't familiar with the tax code for small businesses.

by: Tyrion Lannister

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