Filing your taxes can be stressful, confusing and time-consuming, and business taxes are no exception. There are multiple filings your business may be required to complete and the information you need to file your taxes properly is seemingly endless. Check out this Balboa Capital blog post to ensure a seamless tax season for your business. explains how to file your business taxes with minimal work and effort, even if you are waiting until the last minute.
Get a federal business tax number.
Your Federal Business Tax ID is a nine-digit number that serves as identification for your business for taxing purposes. This ID is useful in opening business bank accounts, filing your tax returns and securing a variety of business licenses. Take care of this step first, as it can be the most time-consuming and needs to be done before other filings can take place.
Learn your tax obligations.
Your federal tax obligations, which consist of the taxes you pay to the IRS, will vary based on the legal structure of your business. Legal structures include sole proprietorship, partnerships, corporations, S corporations, and LLCs. All of these structures will have different tax requirements.
These taxes include income tax, self-employment tax, estimated tax, employer tax and excise tax. Aside from federal taxes, your company is also subject to state and local taxes. Think of these as income tax, sales tax and property tax – taxes that vary from state to state. As with federal taxes, your legal structure will determine your tax obligations for these as well.
Pick a tax year format.
Most sole proprietorships, partnerships and LLCs use the calendar year when filing their business taxes. This is the most standard and basic method used for taxes. Most corporations and large firms use the fiscal tax year. Fiscal years are those that do not end on December 31st. Companies that should utilize the fiscal year include those with high revenues, or that show expenses in one year and income in another.
For the most accurate reports, you will want these transactions to occur in the same 12-month period. A short tax year (less than 12 months) only applies to businesses that did not exist for an entire tax year or have recently changed their tax year period. Tax returns are required regardless if you have been in business for less than a full tax year (12 months). Finally, if you purchase or finance equipment for your business that is eligible for the Section 179 tax deduction, it needs to be put into place by December 31 of the calendar year in order the for deduction to work.