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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 business’s financial paperwork and forms ready. Of course, your tax deadline depends on the type of business entity. For example, tax returns for Partnerships and “S” Corporations are due mid-March, and returns for “C” Corporations and Sole Proprietors are due 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.
Gather your financial documents.
The first item on our list of last-minute tax strategies is to gather your financial documents. If your small business uses accounting software, you can complete this step 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 business’s receipts so you will not miss any potential tax deductions.
You can deduct numerous expenses, so avoid throwing any receipts or invoices away. Typical business expenses include advertising, travel, equipment depreciation, business insurance, professional fees, office supplies, and rent.
Get the correct IRS tax form(s).
After collecting your financial documents, you must get the appropriate IRS form. This will be determined by the type of legal structure your business has. For example, if you operate as a sole proprietorship, you will need to use Form 1040 and a Schedule C form, including your personal income tax return. If you operate as a “C” Corporation or an “S” Corporation, you must use Form 1120 or Form 1120-S, respectively. Finally, if you work as a Partnership, you must 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. If your business is a limited liability corporation (LLC), you can use the Schedule C form, 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, you need to take steps to avoid paying too much in taxes or not paying enough in taxes, which can result in costly tax penalties.
Work with a licensed CPA.
A licensed, certified public accountant (CPA) handling your taxes is recommended whether you are filing early or at the last minute. A CPA is familiar with the latest tax laws and codes for small businesses like yours. As a result, you can save money and maximize your deductions.
Moreover, a CPA knows how to prepare your return in adherence to IRS guidelines, which can help prevent your small business from being audited down the road. If you file your taxes without the help of a CPA, you will most likely find yourself working long hours with mountains of paperwork. In addition, 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.
Do not worry if you are too pressed for time to get your taxes done by the deadline. First, you can request an automatic extension from the IRS. Second, work with your CPA to ensure you file the appropriate IRS form on time and provide all the required information. Failing to do this can result in your business receiving late fees, 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. Again, discuss this with your CPA to learn how IRS payment plans work and determine if they are right for you.
We hope that you find these last-minute tax strategies helpful and that everything goes smoothly when you file your return. Remember to plan early to minimize the stress associated with last-minute tax preparation and filing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.