December 2, 2023

What Companies Should Know Before Doing Their Taxes

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Tax filing for a business often proves to be an intimidating process. With the constantly evolving regulations, it can leave many businesses in confusion as to what information needs to be declared and when they should file their taxes; whether by themselves or through a professional accountant. To give you some assistance and make this journey easier, here are a few key points that all enterprises must consider before submitting their tax forms.

What You Need to Report

Tax filing requires companies to provide a considerable amount of data. This comprises financial profits and losses, assets and liabilities, salary payments such as wages, salaries, bonuses and commissions for the staff members, charitable donations plus business credits like research credit or renewable energy credit; besides any other applicable deductions. To guarantee that all possible tax cuts are taken advantage of by the firm in question they should also gather information regarding its customers/clients associates & vendors.

Key Deadlines

If a company is structured as a proprietorship, the tax deadlines may be slightly different than those for corporations. Here are some key tax deadlines for proprietorships to keep in mind:

  1. April 15 – Individual tax return: Sole proprietorships file their taxes by April 15 along with individuals, so they must file their personal income tax return (Form 1040) by April 15.
  2. June 15 – Estimated tax payments: Proprietorships that expect to owe $1,000 or more in taxes for the year must make estimated tax payments throughout the year. The second payment is due by June 15.
  3. September 15 – Extended tax return: If a proprietorship needs more time to file their tax return, they can request an extension by filing Form 4868. This extends the deadline to file until October 15.

It’s important for proprietorships to keep in mind that they are not separate legal entities from their owners, which means that they do not have their own tax ID number. Instead, the owner’s social security number is used to report the business’s income and expenses on their personal tax return. This can make tax preparation more complex, so it’s a good idea to work with a tax professional to ensure that everything is filed correctly and on time.

DIY Filing v. Hiring an Accountant

When it comes to filing taxes for a business, companies have the option of doing their own taxes or hiring an accountant. Doing DIY business taxes can be challenging and time-consuming, especially if the company is unfamiliar with tax regulations and codes. It’s important to remember that mistakes on tax forms can lead to hefty penalties and fines from the IRS, so companies should be sure to double-check their work.

On the other hand, hiring an accountant can be beneficial for businesses as they are experts in tax law and regulations. They can ensure that all forms are filled out accurately and on time, saving businesses from any potential fines or penalties. Hiring an accountant may also be a good option for companies that have more complex tax situations, such as those with multiple entities or investments.

Filing taxes is a complex procedure for businesses of all sizes, so it’s essential to have an understanding of what details need to be reported, recognize the main tax deadlines, and select whether you should do your own business taxes or employ an accountant. With research and organization beforehand, companies can reduce their apprehension towards filing these important documents.

Did you enjoy reading this article? Here’s more to read:  Why Setting Up a 401(k) Can Get Complicated

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