Regardless of the type or size of our business, tax filing must be handled with the utmost care. There are various rules and regulations that we have to deal with when filing taxes. Large companies have their department that takes care of taxes and accounting. Small businesses often have to prepare for taxes on their own or with the help of outside experts.
Small business owners can follow a simple checklist to prepare for tax returns.
best tax preparation tips for small businesses
1. Identify the appropriate tax form
Different companies are structured differently and depending on the need, a certain type of registration is performed for the company. When it comes to tax matters, the type of tax form we need to submit depends on the type of business registration we have. So the first and foremost point on our tax preparation checklist is that we should be able to categorize the type of tax form we need to file.
2. Discuss tax discrepancies with an expert
As the tax filing deadlines approach, we should contact the accountant or third-party tax preparation services and discuss various aspects of tax matters with them. Even if we, as businessmen, have developed an idea about possible deductions, advantages, and tax obligations, the specialist must verify this. When the accountant reviews our calculation and we both agree, he can start the filing process.
3. Gather documents and records
Not only our corporate structure but also the information we have determines how corporate taxes are filed. We need to collect the following documents before starting the process so that we can complete our business tax return forms.
If we organize our accounting throughout the year through Global Trade Services, we can order the documents immediately. Keep our books up to date year-round to avoid last-minute mistakes. As a small business owner, no matter what income and expenses we list in our financial records, it’s always imperative that we keep everyone’s receipts.
4. Keep track of tax return due dates
Another important aspect of tax preparation is understanding your tax return filing dates. Again, different structures fall under different regulations and therefore have different tax return due dates.
Understanding the correct dates allows us to prepare for submission and saves us the added pressure of ambiguity and panic created by other people’s submission dates.
5. Ensure tax compliance
Another important checkpoint for tax preparation is to determine whether we are entitled to any tax benefits or deductions. From time to time, authorities develop plans and frameworks to make the business ecosystem conducive to commercial ventures. These corporate benefits and deductions are a great way to reduce our tax burden. Depending on our industry, we may be eligible for some.
Tax deductions and benefits are available to companies for expenses that fall under allowable clauses. Additionally, many types of businesses are eligible for tax benefits based on their registration or industry. As money managers, we should know about this.
6. Apply the best accounting practices
Companies have to pay part of their tax obligations in a predefined interval. When preparing a tax return, the entrepreneur must also take into account the taxes already paid. These amounts paid are offset against the company’s total tax liability.
7. Learn all about file extensions
Tax authorities are very clear about tax returns and their due dates. The IRS has developed a few ways for businesses to apply for an extension. No matter how early we start the preparation, any small oversight could cause a delay, or a miscalculation of the amount could result in a tax liability that cannot be paid immediately. We should check with our accountants and find out how to contact the IRS to apply for an extension.
8. Avoid tax obligations
The IRS has plans for businesses that cannot meet their tax obligations. An expert can guide business owners through the process.
9. File taxes correctly
When all of the above has been re-verified and the requirements have been met and the required forms have been completed with the duly required attachments, we are ready to file our tax.
One checklist can cover most basic tax filing requirements. But in reality, small businesses often lack the resources to handle tax preparation while performing the primary function with complete focus. To help small businesses with this, there are bookkeeping services that can help businesses with tax preparation. Outsourcing companies have a team of experts who have years of experience in handling these matters and can help small businesses handle tax issues with ease.