This year’s tax filing deadline will be here before you know it, and there is nothing more stressful than not having all of your company’s financial paperwork and tax forms ready. Your tax deadline depends on the type of business entity you have. For example, tax returns for Partnerships and “S” Corporations are due in mid-March, and tax returns for “C” Corporations and Sole Proprietors are due in mid-April.
In addition, this year’s first quarterly estimated tax deadline is in mid-April. Although time is running out, there are things you can do to make tax time a breeze, even if you are not fully prepared. Balboa Capital created a list of last-minute tax strategies for businesses. We think you will find these tips and ideas to be quite helpful.
Gather your financial documents.
The first step in getting ready for the tax deadline is gathering all the necessary financial paperwork. If your business uses accounting software, you can complete this step rather quickly, as your income, expenses, and sales transactions are just a few mouse clicks away. Next, you will need hard copies (or electronic copies) of all of your company’s receipts so you will not miss any potential tax deductions.
There are numerous expenses that can be deducted, so avoid throwing any receipts or invoices away. Common businesses expenses include advertising, travel, equipment depreciation, business insurance, professional fees, office supplies, and office rent.
Get the correct IRS form(s).
After you collect all of your company’s financial documents, you need to get the appropriate IRS form. This will be determined by the type of legal structure your business has. If you operate as a sole proprietorship, you will need to use Form 1040 and a Schedule C form, which will be included with your personal income tax return. If you operate as a “C” Corporation or an “S” Corporation, you will need to use Form 1120 or Form 1120-S, respectively. If you operate as a Partnership, you will need to use Form 1065.
It is important to remember that “C” Corporations and Partnerships will also need to use Form 941, which deals with employment taxes. You can use the Schedule C form if your business is a limited liability corporation (LLC), but you will need to include Form 1120 if you treat your LLC as a corporation. If you converted your LLC to a “C” corporation last year, there are steps you need to take to avoid paying too much in taxes, or not paying enough in taxes, the latter of which can result in costly tax penalties.
Work with a licensed certified public accountant.
Having a licensed certified public accountant (CPA) handle your company’s taxes is recommended whether you are filing early, or at the last minute. That is because a CPA is familiar with the very latest tax laws and tax codes as they relate to small businesses like yours. As a result, you can save money, and your deductions can be maximized.
Moreover, a CPA knows how to prepare your tax return in adherence to IRS guidelines, which can help prevent your company from being audited down the road. If you file your company’s taxes without the help of a CPA, you will most likely find yourself working long hours with mountains of paperwork. The multitude of line items on your tax return can be confusing, and you can’t afford to make any mistakes.
Still need time? Get an extension.
If you are too pressed for time to get your taxes done by the deadline, do not worry. You can request an automatic extension from the IRS. Work with your CPA to ensure that you file the appropriate IRS form on time, and that all of the required information is provided. Failing to do this can result in your business receiving late fees or fines, or perhaps both.
Lastly, making regularly scheduled payments to the IRS is also an option if you cannot pay what you owe right now. Discuss this with your CPA to learn how IRS payments plans work, and to determine if they are right for you.