Paying taxes is inevitable. Everyone has to do it, whether you want to or not. By preparing for tax season and having all of your documents from the year organized and ready to go, you’ll avoid any unnecessary stress that will prolong the tax process. As long as you already have an estimated amount of money set aside to pay your taxes and you have everything on file, then paying for your taxes will be hassle free.
You should always keep track of every single one of your business’s expenses. Always have the amount, where you purchased the expense, the date, the reason for the expenses, plus any other details that might come in handy during tax time. This is incredibly important to keep on file for the entire year so you can always get the correct amount of tax return possible.
As a small business, the taxes you pay will be based on your self-reported net profits. As long as you save around 30% of your net business income, then you should be able to pay your taxes without any problems. Let’s take a look at three business taxes for small businesses.
This is your yearly income tax return. When you establish your business structure at the start, you’ll choose the form that you file for taxes.
For example, if you’re a sole proprietor, which is a business with only one owner, then you’ll fill out a Schedule C when you file your tax return. On the other hand, if your small business is an S corporation, then you’ll file your tax return with Form 1120S, plus a report of your profit or loss with a Schedule K-1. If your small business operates as a C corporation, then you’ll fill out and file your tax return with Form 1120.
This is an important one if your small business sells certain items like tobacco and alcohol or if you use certain equipment or collect payments for services. Whichever the case, you’ll most likely have to pay excise taxes in order to keep your operations going.
If you have employees at your small business, chances are you’ll pay employment taxes. These include: Federal unemployment tax, federal income tax withholding, and Social Security and Medicare taxes.
You’ll also have to claim tax deductions for your small business. This includes any startup costs, office supplies you have accumulated to make your business flourish, insurance, and salaries for your employees. The good news about being a small business owner is that you can typically claim more for your tax deductions when compared to a traditional employee.
It may seem daunting at first when you have to think about tackling taxes and making the correct claims. With careful preparation and planning, you’ll be able to work on your taxes without any added stress. Income tax, excise taxes, and employment taxes are just three of the several taxes that come with small businesses. You’ll be able to claim more in tax deductions as a small business, which is a bonus for all of your hard work!