The 2023 tax season is almost here!
If that sent a shiver down your spine, then you definitely need our comprehensive checklist, designed for small business owners like you. From understanding various business taxes and tax forms to organizing crucial documents, we’ve got you covered. We’ll help you identify applicable tax deductions and credits and stress the importance of planning ahead.
Let’s guarantee a smooth tax preparation process and help you navigate this tax season with ease.
✅ Make Sure Your Books Are Caught Up
This first step is easy if you ensure your books are up-to-date year-round. So, what does this involve? Well, it’s about regularly checking your accounts and keeping your books balanced. Depending on how busy your business is, you might do this daily, weekly, or monthly. Also, you’ve got to make sure that all transactions, receipts, invoices, and expenses are recorded accurately and sorted out properly.
But don’t forget – accuracy is key. You don’t want any mistakes or omissions in your books because these can lead to miscalculations when you’re filing your taxes. Remember to keep a keen eye on all your business-related expenses too. These can be anything from office supplies to business trips, and they’re important because they can reduce your taxable income, which means you’ll end up with a lower tax bill.
PRO TIP! This is where Ceterus truly shines. With us, you can trust that your expenses are meticulously tracked, and your books are accurate and up-to-date, ensuring that nothing falls through the cracks.
✅ Know The Four Types Of Business Taxes
As a small business owner, it’s your duty to fulfill both federal and state tax obligations. Regardless of whether you’re running a sole proprietorship, partnership, S corporation, or C corporation, you may be liable for four main types of taxes. Remember, these taxes are mandated not just by the IRS, but also by state tax authorities.
- Income Tax: Income tax is a levy imposed by the government on both individuals’ and businesses’ earnings, collected at local, state, and federal levels. These income tax responsibilities will depend on how you’ve structured your business.
- Self-Employment Tax: As a small business owner who works for themselves, this is for you. This self-employment tax contributes to your own coverage of Social Security and Medicare. And, according to the IRS, if your net earnings from your business were $400 or more, you should pay the self-employment tax rate and report it as self-employment.
- Employment Taxes: If your business has employees, you’ll have certain employment tax responsibilities, which include withholding income taxes on wages and deducting social security and Medicare taxes.
- Excise Taxes: These are paid when purchases are made on specific goods or services like fuel. The business often includes these taxes in the price of the product.
✅ Learn Your Business Tax Forms
Knowing what type of tax forms you’ll need to fill out for your small business, again, comes down to what type of business structure you have. But, here are some of the most commonly used forms for small business taxes:
- Form 1040: Used for annual individual tax returns.
- Schedule C: Use this form if you’re a sole proprietor and need to report your annual profit and loss. Make sure you file it along with Form 1040.
- Form 1040-ES: Serves as a voucher for making estimated tax payments.
- Form 1040-SE: Determines self-employment taxes, representing the proprietor’s share of Social Security and Medicare taxes.
- Schedule K-1: If your business is an S corporation or partnership, you’ll need to use this form to report your income.
- 1099-Misc: This one is used for reporting rental income paid to landlords or gross proceeds paid to attorneys.
- 1099-NEC: Use this form to report non-employee compensation.
- Form 1120-S: This one’s for S corporations and should be submitted as a separate document from your individual income tax return.
- Form 1120: Use this form if you’re a C corporation.
- Form 720: This form is used for reporting excise taxes related to your business.
- Form 1065: Partnerships file this form separately from personal income tax return to report financial performance to the IRS – profits, losses, deductions and credits.
✅ Organize and Collect Your Financial Documents
This next step of your small business tax prep can feel overwhelming due to the sheer volume of paperwork. Besides your SSN, Federal Tax ID, and up to 3 years of previous tax returns, here’s a list of financial documents, you might need:
Small Business Income Taxes:
- Accounting journals/ledgers, balance sheet, income statement
- Transaction documents, bank deposit slips, account statements
- Invoices, checkbook, credit card statements
- Vehicle/mileage logs
- Employee forms: W-9, I-9, W-2, 1099, & Non-employee tax forms: 1099-MISC and 1099-NEC
- Payroll reports, gross monthly payroll, total deductions
PRO TIP! Start collecting your 1099 documents as early as you can to meet the end-of-year IRS deadline!
Small Business Expenses:
- Receipts split into categories such as office supplies, operational costs, entertainment/travel, marketing/advertising, professional fees
- Insurance policy details
- Depreciation schedules for equipment/assets
✅ Know Common Tax Deductions and Credit To Apply For
Next, you’ll want to figure out what type of tax deductions and credits you can apply for – this will help reduce your tax bill after all is said and done. Some common small business tax deductions include:
- Office supplies (paper, pens, toilet paper, etc.)
- Rent, travel and retirement plan expenses
- Certain business insurance costs
- Interest (this includes bank loans, credit cards for your business, funds taken out for investments, etc.)
- Employee wages & benefits
Small business tax credits that are generally common are investment credit, retirement plan credit, work opportunity credit, disabled access credit, paid family and medical leave credit and more.
✅ Planning Ahead…
Keep those important small business tax deadlines on your calendar. Your phone should be bugging you about the upcoming deadlines right now so you can start preparing.
- January 31, 2024: Deadline for employees or independent contractors to receive their W-2, 1099-NEC, or 1099-MISC tax forms.
- March 15, 2024: Deadline for partnerships, S corporations, or LLCs taxed as partnerships to file business tax returns. Deadline to file Form 2553 for S corporation election for tax year 2023.
- April 15, 2024: This deadline date for C corporation tax returns, personal returns, and extensions filed (if necessary).
- September 15, 2024: Deadline for partnership or S corporation return if extension was requested.
- October 16, 2024: Deadline for sole proprietorships corporate return if an extension was requested.
Lastly, remove stress from your tax vocabulary by utilizing Ceterus’s tax services. Our job is to help you overcome your tax anxieties and fears, all year around. With us, you’ll receive:
- Enjoy year-round tax planning at no extra cost.
- We blend bookkeeping with tax tasks for accurate, timely filings – covering all tax obligations, including federal, state, sales and personal property tax.
- Get a clear financial picture with our comprehensive tax strategy.
Plus, we’ll handle your taxes regardless of your business setup. Schedule a consultation today to see how Ceterus can help you get back to focusing on what you are most passionate about – your business.