First Person: Small Business Tax Management
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Accounting for and paying taxes is one of the chores that many small business owners dread the most. When I started my small business I found that taking the time to learn about my business’s taxpaying responsibilities and to get organized was essential to getting its tax management under control. Based on my experience, here are some tips for handling small business tax management.
Decide How Much You Want to Do Yourself. When my business was a sole proprietorship, I handled all tax chores myself. When I incorporated, I decided to turn over year-end tax filings to my accountant, since I didn’t want to take the time to learn the complexities of filing corporate tax returns in my state. Depending on the size and complexity of you business, decide how much tax management you want to do yourself.
You’ll also have to decide whether you just want your accountant to file your year end tax returns, as mine does, or other interim tax returns as well. Using accounting software and federal, state and local websites, I can easily file and pay my business’s taxes throughout the year. For a simple business, this is not an overly time consuming chore, and I find it helps me better understand my business’s cash flow. If your business is large and complex, you may want your accountant to take on more of its tax reporting chores during the year.
Understand Your Business Tax Liabilities. When most of us think about business taxes, our first thought is income taxes. However, when I began to investigate my corporation’s tax liabilities, I found that it has to pay a number of other taxes, including several state and local taxes and fees unrelated to income and unemployment taxes. In total my business has to pay four different local taxes each year, two state taxes, and four federal taxes (including payroll taxes). Be sure that you know and understand all your tax liabilities and when the taxes are due.
Get Your Record Keeping in Order. Even if you have your accountant file your tax returns as I do, you will be responsible for providing him with accurate and timely information. The more you have him do for your business, the more often you will need to submit the information necessary to prepare your returns. Therefore, having detailed, accurate and up-to-date tax records is essential. Accounting software can be a big help with tax accounting, since it can calculate many tax liabilities for you and alert you to tax payment due dates.
Use the Internet for Tax Filings When Possible. Increasingly, many state, local and federal tax payments and filings can be or are required to be made online. I have found that once your online accounts are set up, this is a terrific time saver. Therefore, I suggest you take full advantage of these systems when possible. Your accountant probably can help you get started.
Know When All Tax Payments and Filings Are Due. Initially I found the numerous federal, state and local tax payment and filing due dates for my business confusing and intimidating. Some taxes had to be paid monthly; many returns had to be filed quarterly, followed up by an annual filing; some taxes only had to paid once a year; and W-2s had to be prepared at year end. Your own filing and payment schedule will depend in part on where your business is located and how many and what kind of employees you have (W-2 or outside contractors). Making a master list of tax filing and payment dates can be very helpful, especially since there can be financial penalties for missing a filing date or filing late.
More from this contributor:
How to Save on Small Business Legal Costs
First Person: Should a Small Business Outsource Order Fulfillment?
Small Business 101: Writing an Employee Handbook
Article source: http://finance.yahoo.com/news/First-Person-Small-Business-ac-2399752566.html
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Wow this is the best source for me for e filing but how can i check my tax refund status online. I also want to file my business taxes but i have no perfect source.