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As a business owner, you have an added burden when tax season arrives. Taxpayers with a business spend significantly more time on tax preparation than those without businesses. The process can be especially stressful if you aren't sure what tax reporting and payment requirements you are subjected to. DoughMain Financial Literacy Foundation, Inc., is dedicated to helping business owners like you, providing financial literacy resources to demystify the tax preparation and filing process. Read on for a starter guide to a stress-free tax filing process. Get your paperwork organized. You will need to sift through a lot of paperwork to complete your business tax filing. Start getting organized now. Depending on your circumstances, you may need Federal Wage and Tax Statements (Form W-2), Employer Annual Federal Tax Return (Form 944), and Transmittal of Income and Tax Statements (Form W-3). You can find all of this paperwork on the Internal Revenue Service website. Figuring out and finding what you need now will save you stress when you're actually filing. Make sure to clearly separate business and personal finances. As you go through your paperwork, make sure to distinguish between personal and business-related documentation. This simplifies tax filing and will also make matters easier if you are audited by the IRS. If you don't already have one, consider opening a business bank account. There are various advantages, such as the ability to build business credit — improving your financing prospects, avoiding personal liability, and better revenue tracking. Clarify what rebates and credits you are entitled to. Tax credits and rebates can lower your final business tax bill. Take the time to check what you may be eligible for. Possibilities include earned income tax credit, child and dependent care credit, retirement plan startup cost tax credit, work opportunity tax credit, and more. For tailor-made advice, consult a tax professional. Ensure you've properly differentiated employees versus contractors. As a business owner, you will also have to submit tax paperwork to the IRS regarding your workers. What paperwork you submit depends on whether the worker is an employee or an independent contractor. Independent contractors require a 1099, for example, while employees need a W-2 and W-4. Legal Zoom explains how to properly differentiate between the two categories. For example, the courts may use the "right to control" test, determining how much authority you, the employer, have over whether the worker does their work or not. Invest in tech tools to simplify record-keeping. Tax preparation and filing will take time. Fortunately, there are tools available to help expedite the process. Take the 1099 forms for independent contractors, for example. An online payroll system allows you to file 1099 online, minimizing hassle and the confusion between 1099-MISC and 1099-NEC and when to use them. Online payroll systems also simplify payments, allowing you to pay contractors more quickly. Change your business structure if needed. As you prepare for tax season, you may discover that you would be better off with a different business structure. Diverse entities like limited liability companies, corporations, and sole proprietorships vary in terms of tax obligations and reporting requirements. While changing your business structure now won't make a huge difference when it comes to reporting for the last tax year, it can help you save money next tax year. Don't let tax season overwhelm you. The above tips can help you get through it easily. If you find yourself struggling, don't hesitate to turn to a professional for help. DoughMain Financial Literacy Foundation, Inc. gives small business owners the knowledge they need to succeed. Visit the website to view the current course offerings.
17 Comments
10/25/2021 01:15:26 am
I like that this post highlighted that when looking to have our taxes settled, it is important that we ensure it is done properly. One of the best ways to do so without feeling overly stressed is to hire a tax preparer service. Maybe I can look for a reputable service to ensure that our taxes are filed and documented properly.
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11/2/2021 07:26:54 pm
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11/8/2021 09:14:18 pm
I didn't know that 1099 forms were for independent contractors. I need to file taxes for my personal business. I'll have to hire an accountant to help me with deductions.
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12/7/2021 10:34:13 am
I want to make sure that I file my taxes together properly. It makes sense that I would want to hire a professional to help me out with this! I'll be sure to organize my paperwork correctly so that I can handle things right.
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12/14/2021 07:04:37 pm
It's good to know that tax preparation will take time. That is something I can deal with. But it all depends on who can help me.
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It helped when you mentioned that it is important to fix early to prevent stressful procedures. A friend of mine mentioned to me last night about tax relief services and asked how will he know if he is eligible to have them. Thanks to this informative article and I'll be sure to tell him that it will be much better if he consults a trusted tax resolution service as they can answer all his inquiries.
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1/12/2022 11:26:39 pm
I never knew that taxpayers with a business spend significantly more time on tax preparation than those without businesses. I'll share this with my aunt so that she could have ideas on taxpayers for her business. Thank you for the information about tax prep.
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1/21/2022 06:18:20 am
I never knew that taxpayers who own a company spend substantially more time preparing their taxes than those who do not. I never thought that it would be like this, I'll share this with my aunt. Thank you for the information about tax services.
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2/1/2022 08:32:39 pm
I am most captivated when you mentioned that your final business tax bill can be lessened with tax credits and rebates. I think not all businesses are aware of that so, they often ignore checking their eligibility. I agree that it's advisable to seek assistance from a professional for their tax preparation.
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2/2/2022 09:19:02 pm
My favorite part of this article is the importance of spending time to understand and learn about the proper financial planning to prevent mistakes. A friend of mine mentioned to me last night that he is looking for a reliable tax preparation service for his business because he is having a hard time fixing it, and he asked if I have any idea what is the best option to do. Thanks to this informative article and I'll be sure to tell him that it will be much better if he consults a trusted tax preparation service as they can answer all his inquiries.
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2/5/2022 06:09:56 am
I appreciate that you explained taking the time to look into what tax credits and rebates you could be qualified for to reduce your ultimate company tax payment. My best friend is looking for some info, this should help him. I appreciate that you helped me learn more about tax reduction.
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3/29/2022 10:59:32 am
It's great that you talked about a business's tax filing and how you'd need to keep good track of your documents. Recently, my brother announced he's interested in starting a business. I believe it'd be wise if my brother analyzed his future business's tax filing needs with an expert's help, so I'll suggest it right away. Thank you for the advice on how to reduce our stress when dealing with taxes.
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7/1/2022 08:11:31 pm
Thanks for reminding us that when filing our taxes, it is important for us to ensure that we separate our personal taxes from business taxes. That way, we can be certain that all of our taxes are in order. I think, because this will be my first time filing taxes, I should with a certified professional to help me ensure I file them properly.
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9/7/2022 08:48:53 am
What a wonderful article! This is a groove with useful information, and I can't wait to delve in and receive the information the resources you've provided. Your pleasure is stimulating.
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It's interesting to know that your tax can be lowered with credits and rebates, especially when you are eligible for those. I can imagine how taxation accounting services would be able to help a business owner to check if it is possible for their company. If they are able to get that kind of deductions, the company can definitely get more income which can help them develop or even increase the salary of their workers.
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10/20/2022 07:35:47 pm
Thanks so much for the advice on how to prepare for tax season. My parents have complicated finances and my mom is struggling to keep up with it recently. They've been looking into hiring an accountant to help them when tax season comes around or for any other reason.
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10/25/2022 02:27:36 am
I had no idea that tax credits and rebates might reduce your overall corporate tax liability. My husband has a business and wants to reduce spending, particularly on taxes. I will advise my husband to use a tax preparation service so that he can assist me with the rebates and paperwork.
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