The One and Only Business Tax Preparation Checklist You’ll Ever Need

Did you know that you could be subject to fines or even a jail sentence if you don’t pay your business taxes accurately or on time?

If you file your business taxes late, then your penalty is 5% of the taxes. This is due each month that your return is late. Remember, that this penalty will not exceed 25% of your unpaid taxes.

It’s always better to avoid such contingencies, by doing your business taxes on time using a tax preparation checklist. We have created one of these checklists below for you, so you can stop worrying about your business finances and sleep well at night, so keep reading.

Figure Out What Kind of Taxes to File

There are five different kinds of taxes that a small business owner has to take into account:

  • Self-employment taxes
  • Income taxes
  • Quarterly estimated tax payments
  • Excise taxes
  • Employment taxes

Each of these taxes will require you to deal with different scenarios. Once you get used to it, you won’t have to think twice about it. But your first time filing these taxes, you will feel like a fish out of water.

Find the Appropriate Tax Forms

The IRS tries to make it as easy as possible for you to file your taxes in a timely fashion. One way it helps is by providing all tax forms necessary for business taxes on their website. But it can get complicated quite fast.

So make sure you start searching for and filing away these tax forms a few months before you need to file your taxes. Too many business owners hate doing business taxes because they are always scrambling near their tax deadline to get their forms and documents together.

It will drive you mad if you do this every year. Here’s a list of all the forms and publications you might need for any taxes.

Mark Out Your Tax Calendar

Personal taxes are easy because you only have to worry about that one date before which you need to file your taxes. BUT, business taxes are much more complicated than that.

Some of these dates to remember are:

  • January 31st – send out your W-2s and 1099s
  • February 28th – 1099s and 1096 filed on paper
  • March 15th – Partnerships, S corporations, and multimember LLCs file
  • April 1st – 1099s filed electronically
  • April 15th – single-member LLCs, sole proprietors, and C corporations file

If all this looks like gibberish to you, don’t worry you will soon know exactly what these acronyms mean. You should also know what kind of business you are running, whether a corporation or an LLC or something else.

The four estimated tax payments are due on these dates:

  • April 15th
  • June 15th
  • September 3rd
  • January 4th

Make sure to add all these important dates to your calendar and to-do list, and start preparing for them well in advance.

Gather All the Documents You Need

As a small business owner, it might sometimes feel like you are drowning in paperwork. And business taxes are no exception. There are dozens of documents you will need to gather if you wish to complete your business taxes in time.

It’s a good idea to file these documents into appropriate file folders from the get-go, so you aren’t scrambling at the deadline to get them all together.

Some necessary documents are:

  • Federal Tax ID number and Social Security Number
  • Previous year’s tax return
  • Financial statements
  • Business-related expenses documentation
  • Employment tax documentation
  • In-home office documentation

Once you have all these documents on hand, inputting all the appropriate information into tax forms will be a cinch.

What Tax Deductions and Credits Are You Eligible For?

You don’t want to ignore all the tax deductions and credits that you are eligible for as they can reduce your tax load by quite a bit.

There are hundreds of tax deductions out there that small business owners ignore or aren’t aware of. Do your research and make sure you squeeze out every deduction and credit you can.

Of course, your home office expenses, advertising expenses, healthcare expenses, and travel expenses will help you reduce your taxes. But also include depreciating assets and rent into your accounting.

Depending on the type of industry your business is in, you could even be eligible for industry-specific credits and deductions. So do your due diligence or ask colleagues in your industry for more information on this.

If you realize that you cannot afford to pay your taxes this year and would like to lighten your load, consider applying for the Offer In Compromise Program with the IRS. For OIC tax help, click the link.

File Your Taxes and Keep All Documents for 7 Years

Finally, make sure you file your taxes on time, and preferably a few days before the deadline, so internet issues or connectivity problems don’t delay your filing. Also, do not think that you are finished with taxes once you file.

The IRS has the right to come to you at any time after you file your taxes to check the accuracy of your documents and filing. Thus, ensure to keep your documents on hand at least for 7 years after your tax year. This should ensure you don’t end up hunting down old vendors or customers to get receipts that you shredded months ago.

A Tax Preparation Checklist – Your Business Finances Needs This

A small business owner like you already has dozens of things on your plate. That’s why the more you can simplify your tax preparation, the easier it will be to complete your business taxes.

Use the tax preparation checklist above every year. Your business finances will thank you for this, as will your accountants and bookkeepers.

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