Small business owners are rarely excited to prepare and file their taxes, and it’s understandable. With a daunting amount of paperwork to sort through and complex tax forms to navigate, it’s certainly not as exciting as closing a sale or cutting the ribbon at a new location. But it’s an unavoidable task, so doing everything possible to simplify the process is essential.
With this checklist (and the tools that come with your Waco business checking account), we’ll show you how to make the tax filing process as easy as possible, so you can get back to growing your business.
Understand Which Business Tax Forms You'll Have to File
Having the right form is crucial to filing your taxes; however, there isn’t a one-size-fits-all approach to business taxes. The exact forms you’ll have to file—and taxes you’ll have to pay—will depend on how your small business is structured: Sole Proprietorship, Partnership, Corporations, S Corporation, or LLC.
If you own a very small business, you’re most likely operating under a sole proprietorship or LLC. But, there are dozens of different IRS tax forms out there, each with a different purpose.
Here are the most common IRS forms used to report small business taxes:
- Corporations file their taxes using Form 1120.
- S Corporations use Form 1120-S.
- Partnerships and LLCs with more than one member use Form 1065.
- Sole proprietorships and LLCs with only one member use Schedule C attached to the owner’s Form 1040.
If you’re unsure which form to use, the IRS has a complete list of guidelines broken down by business type.
Find Out When Your Deadlines Are
In addition to knowing which forms to file, it’s also essential to know your deadlines.
For most people, April 18 is the date circled on the calendar when they have to file their individual tax returns. Many small businesses end up having the same tax deadlines as individual taxpayers. But business deadlines can vary based on what type of business you have and how you’ve structured it.
Here are a few of the common small business tax deadlines:
- Small businesses that are sole proprietorships, single-member limited liability companies, or C corporations have their tax deadline on April 18.
- If your small business is set up as an S corporation or a partnership, your tax return is due on March 15.
Collect Important Financial Documents
- Balance Sheet
- Profit & Loss Statement
- Income Report
- Expense Report
- Inventory Valuation
- Total Cost Of Goods (COGS)
- Sales Tax Summary
- Payroll Summary
- Mileage Log
- Asset Depreciation Log
At TFNB, you can integrate your Waco business checking account with QuickBooks and other accounting software. This allows you to find all necessary documentation in one place for a more seamless tax preparation process.
Account For All Your Revenue and Expenses
When you’re reporting your revenue and expenses to the IRS, you want to be as accurate as possible. If you don’t keep track of your expenses, you could miss out on money-saving deductions. And, if you under-report how much income your small business has brought in, you expose yourself to a significant risk of fines.
Fortunately, if you have a business checking account at TFNB, keeping track of this information is easy. With our online business banking tools, you can view how much money your small business has brought in, and your transactions are automatically categorized—allowing you to report on a granular level.
Consider Getting Outside Help From a Professional
So many entrepreneurs try to do the bookkeeping by themselves in an attempt to save money. In many cases though, they do more harm than good—especially if small business taxes aren’t their area of expertise.
From errors on reporting to misallocation of expenses, one small mistake on your tax forms could lead to fines or a visit from the IRS. That’s why hiring a tax professional might be a good use of time and money, so you can focus on your core competency.
Sure, you’ll be taking on an added expense. But it’s a far smaller expense than the other potential costs of amateur tax prep mistakes. And they may find some money-saving deductions that save you thousands of dollars in taxes!
Plus, banks and investors like to see well-prepared financials. Having a tax professional review your finances regularly can not only simplify future tax preparations, but can also help when it comes time to prepare for future loans, investments, and overall growth.
File For An Extension If You Need One
As we mentioned earlier, the tax filing and payment deadlines for most small businesses fall on either March 15 or April 18 this year. If you don’t think you’ll be able to file on time, don’t hesitate to request a filing extension from the IRS.
You can e-file for an automatic tax-filing extension, giving you until the fall to file your return. But keep in mind, the extension is only for filing the return. You still have to pay your taxes by the original deadline, even if you receive a filing extension. If you miss the payment deadline, you face the risk of incurring tax penalties and back taxes.
TFNB's Business Banking Solutions Make Filing Taxes Simple
Nothing will completely eliminate the pain of tax season. However, knowing what to expect, and using the right tools—like this checklist and the resources that come with your Waco business banking account—makes the process a lot easier.
At TFNB, we’re here to help your business through this tax season and beyond. That’s why we’re your bank for life.
If you have any questions or would like to know more about our banking solutions, contact us at 254-840-2836
