We’re already in Q4, and you know what that means! Small business owners like you have an important task on their to-do list: getting ready for tax season.
Many important IRS forms—like W-2s, 1099s, Form 940, and Form 941—have a January deadline, so it’s a good idea to start preparing early.
Tax Prep Tips for Small Business Owners
Here are a few essential tips to help you stay on top of things and take advantage of available tax savings:
- Get Your Financial Records in Order: Before you can even think about filing, it’s important to organize your receipts, invoices, and any previous tax returns. Good record-keeping is essential for accurately reporting income and claiming those valuable tax deductions.
- Understand Your Tax Obligations: Small business taxes can be complex, but the more you understand your obligations, the better prepared you’ll be. For instance, if you pay quarterly estimated taxes or self-employment taxes, make sure you’re on track. Familiarizing yourself with these details can help you avoid any surprises or penalties down the road.
- Maximize Your Tax Deductions: The good news for small business owners is that there are plenty of tax deductions available to help reduce taxable income. Common tax deductions include office supplies, travel expenses, and employee benefits. Don’t forget home office deductions if you qualify. The more accurate and complete your records, the more tax deductions you’ll be able to take advantage of.
- Double-Check Your EIN and Employee Data: Small mistakes can cause big problems. Make sure your Employer Identification Number (EIN) and employee information are correct before submitting your forms. It’s a simple step that can save you a lot of headaches later on.
A Few Key IRS Forms for Small Business Owners
Here are a few key IRS forms that every small business owner should be familiar with as their deadlines approach:
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- W-2 Forms: These forms are used to report wages, tips, and other compensation paid to employees. You need to file W-2s with the IRS and give copies to your employees by January 31st. This helps your employees file their own tax returns on time.
- Form 940: This annual form reports Federal Unemployment Tax Act (FUTA) taxes paid for your employees. It’s due by January 31st. Keep in mind that FUTA is a federal tax, and you’ll also have state unemployment taxes to manage separately.
- Form 941: Filed quarterly, with a deadline falling on January 31st, Form 941 confirms income taxes, Social Security, and Medicare taxes withheld from employee paychecks. It also includes your share of Social Security and Medicare taxes. Keeping up with these quarterly filings is critical for staying in compliance.
- 1099 Forms:
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- 1099-MISC: This form is used to report various types of income that don’t fall into specific IRS categories, such as rent, prizes, or legal settlements. It used to cover non-employee compensation, but this is now reported on a separate form (1099-NEC).
- 1099-NEC: This form is specifically used to report non-employee compensation, which includes payments of $600 or more to independent contractors or freelancers. If you hire contractors for your business, you’ll need to file this form with the IRS and provide a copy to the contractor by January 31st.
How Ceterus Can Help You This Tax Season
At Ceterus, we understand the unique tax needs of small business owners. Whether your business is structured as a C Corp, S Corp, or partnership, our team will make sure you file the correct forms on time.
If you’re looking for a simple way to manage your 1099 filings, our 1099 Manager tool within our Edge platform makes the process practically effortless. Here’s how it can help you:
- Easily manage vendor data and update W-9 information.
- Verify amounts paid to vendors once your year-end books are closed.
- Review and update any legal business information that’s changed over the year.
- Quickly check a vendor’s filing status and review amounts on your 1099 forms.
The best part? Once you’ve collected W-9s from your vendors, you just input the data into the tool, and we’ll take care of the 1099 filings for you.
Schedule a call with us today at Ceterus, and let’s navigate the tax season together.
