Let’s face it: taxes are boring. The idea of filing taxes for your business can be even more unappealing, especially if you just started a side gig or small business and aren’t ready to hire an accountant yet. But failing to file your taxes on time or correctly can have serious consequences, including expensive fines and penalties, as well as a prolonged period before you can get your business back in good standing with the IRS. If you need help writing off the cost of your business expenses as a tax deduction, check out this quick list of what you need from your accountant so that they can file your taxes for you. If you don’t have an accountant yet or want to double-check that they have all the information they need from you before filing, here is what they will need to file your taxes:
We’ll start with the basics: what is included in a tax return? A short answer would be that businesses file their taxes with the IRS to report their income and expenses. Tax forms summarize your business’s financial situation for the given year, and the IRS uses this information to calculate how much in taxes businesses owe. A business tax return also includes other information like the amount employees were paid, the amount of deductions companies took on business-related expenses, and how much taxes businesses paid or owed.
Business owners need to know how to report the income from their business. You’ll report it on your tax return, even if you intend to return it to your business. Whether it’s a sole proprietorship or an incorporated business, the IRS wants to know all of your business’s income. For sole proprietors and S-Corporations, the income is reported on a 1040 Schedule C. Business owners who formed a C-Corporation must report their business income on an 1120 corporate tax return.
For many businesses, the first time you’ll have to deal with taxes is when you purchase assets for your company. You may not have to worry about this if you own a service-based business and don’t own many hard assets. But if you’re opening a brick-and-mortar store or acquiring expensive equipment, you’ll probably have to report the purchase on your taxes. Business asset taxes apply to everything from the desk you work at every day to the computer system you use to the delivery van you purchased for your business. Regarding assets, you’ll report their fair market value on your taxes. You can find this value online, but remember that it’s best to get two or three different values and compare them before deciding which one to report.
Businesses must report the amount of money they pay their employees on their taxes. This information is found on Form W-2. If you hire contractors for various tasks but don’t have employees, you won’t have to worry about this part of the tax return. You must also report their Social Security numbers and withhold federal and state income and payroll taxes from their paychecks if you have employees. If you have contractors that work for you but are paid with 1099 instead of a W-2, you’ll have to report their earnings to the IRS.
Business owners need to track all their expenses to deduct them from their taxes. From office supplies to vehicle maintenance to professional development, there are a lot of business expenses that can be deducted. Taxes are an art. They are based on general guidelines that can be interpreted differently. When reporting your business expenses, keeping detailed records of every purchase you make for your business is best. You’ll want to know the date, amount, and why you made the purchase, as well as have proof of each purchase, like copies of receipts or credit card statements.
When you’re ready to file your taxes for the first time, knowing what the accountant will need from you to file your taxes correctly is helpful. While taxes are a necessary part of business, they don’t have to be overwhelming. By keeping track of your business expenses and reporting them on your taxes, you can get a big chunk of your taxes taken care of each year.
Get the best advice on tax savings, accounting services, payroll, self assessment, VAT and more, whether you want to call us directly, request a call back or chat online with our experts, rest assured that we will always give you the best advice.If you have any questions, or would like to speak to us in person, please do get in touch. We're here to help.
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