The new year can be a busy time for small businesses and finding the time to get prepared for tax filing can seem like a chore in itself. Rocket Lawyer understands the stress that might come with doing your taxes and we are here to help. That is why we have put together an easy checklist to help you and your business get on track and prepared for tax season.
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Know your deadlines
Depending on your business structure, your tax due dates will vary. If your business runs or is taxed as a sole proprietorship, single-member LLC or C-Corporation, the tax deadline is April 17, 2018. Since our traditional Tax Day, April 15th falls on a Sunday and is followed by a local holiday in Washington DC, you’ll have two extra days to file this year.
That said if you have a business that runs or is taxed as an S-Corporation or Partnership, the deadline for tax filings has changed from April 15th to March 15th. Check out our blog post about tax deadlines and other changes you might need to know about.
Gather needed documents
Before filling out any tax form to report your business income, you should have all records in front of you that report your business earnings and expenses. It might be a good idea to ask your tax accountant what additional documents are necessary, but in the meantime, here is some information that can be helpful to have on hand:
- Gross receipts from sales or services
- Sales records
- Returns and allowances
- Business checking/savings account interest
- All expenses
- Commissions paid to subcontractors
- Business insurance
- Business loan interest
- Professional fees
- Office supplies
- Office space rent
Select the correct tax form
Here are the forms you might need for each type of small business:
- 1040, U.S. Individual Income Tax Return
- Schedule C (Form 1040), Profit or Loss from Business
- or Schedule C-EZ (Form 1040), Net Profit from Business
Depending on elections made by the LLC and the number of members, the IRS will treat an LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return.
- If the LLC is classified as a partnership you will use a 1065, U.S. Return of Partnership Income
- If the LLC is classified as part of the business owner’s own tax return you will use a 1040, U.S. Individual Income Tax Return
- And if the LLC is classified as a corporation you will use a 1120, U.S. Corporation Income Tax Return
Talk to an accountant or other tax professional, if you have questions about which form to file.
Filing an extension
If you are not sure you will be able to file your business taxes before the deadline, you may consider filing an extension. An extension can be 5-6 months from the due date. So if your due date is on March 15th, you will have until September 15th to file your taxes. However, an extension does not extend the period for any payment that is due. You will still want to make any payment that is owed by the original due date to avoid any late fees.
Tax prep can be confusing for anyone — especially if you own a small business. If you have questions or are still not sure how to go about filing your taxes or avoiding an audit. Rocket Lawyer can help. Our tax attorneys can answer your questions and concerns, and help you with the legal part of your business, so you can focus on growing your revenue.