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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
11/2/2021 11:04:11 am
This is the first year my husband and I will file our taxes with a business. We were a little worried about it. Thank you for the advice to get our paperwork organized before we visit a tax accountant. We will also look into separating our business and personal finances. We will probably open a business account at the bank. That is a great suggestion.
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11/25/2021 10:26:14 pm
It helped when you mentioned that it is important to be aware that tax preparation will take time to process. A friend of mine mentioned to me last night that he is looking for a reliable income tax preparation service for his business because he is having a hard time fixing it 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 business income tax preparation service as they can answer all his inquiries.
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3/23/2022 11:16:25 am
I've been having a hard time putting my taxes together, but I'm not sure what to do about it. It makes sense that I would want to get a professional to help me out with this. That sees like a good way to ensure that I end up organizing everything properly.
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5/31/2022 01:16:51 am
Entire article is amazing but I liked the point that you've mentioned about <a href="http://www.multistatetax.net/tax-preparation-center">tax</a> preparation will take time to process. Also the point of investing in tech tools is a great point here, as it helps in filing.
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7/4/2022 07:03:54 am
Found your post interesting to read. I can't wait to see your post soon. Good Luck with the upcoming update. This article is very useful, interesting, and effective.
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7/29/2022 02:34:36 pm
Thank you for sharing this information.
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8/8/2022 11:47:39 pm
It's so excellently done, and you have some exceptionally good ideas. This post is excellent!
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8/15/2022 01:42:10 am
It's so excellently done, and you have some exceptionally good ideas. This post is excellent!
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8/19/2022 02:09:41 am
Keep up with tax-related documents all year long; it will make tax season less stressful. Keep receipts for things like charity contributions, work-related costs, medical bills, and other things from step 4 in case you need them later. Additionally, you might wish to save any statements for scholarships, fellowships, investments, or student loans. You may decide whether to itemize and streamline the process by having these close at hand. After you file, you should continue to maintain your documents. Keeping records for at least three years is advised by the IRS.
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10/19/2022 03:02:51 am
Thank you for the reminder that, as a company owner, you must also file tax returns with the IRS for your employees. Due to everyone's hectic schedules during tax season, there aren't enough individuals to complete the tax documents. I'll use the tax preparation service to assist my business.
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11/21/2022 07:13:44 am
It was fascinating to know that there are tools available to help expedite tax preparation and filing. My friend told me that none of their staff are familiar with accounting tools. I think it's best to hire a tax accountant that is adept in working with any accounting tools.
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11/22/2022 09:27:20 pm
Thank you for mentioning that tax breaks and credits can reduce your overall business tax liability. My sister owns a company. To cut expenses, she wants to reduce her final corporate tax payment. I'll advise her to consult a tax preparation specialist to assist her in obtaining the tax credit.
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I like that you talked about how the filing and tax preparation can be expedited with the help of certain tools out there. I guess it would be quicker if you also have a professional assisting you throughout the process. With their expertise and experience, any bump in the road can probably be fixed and any error can be avoided to prevent costly repairs as well.
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1/14/2023 04:19:11 am
One of the best posts I have ever come across. Not only did I learn a lot of hidden things. Keep uploading and encouraging us.
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1/18/2023 07:43:21 am
Nice blog! Thanks for sharing this blog with us. I like the article and it is very helpful for me. Thanks for sharing.
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