Business Tax Returns Filing
Filing for business taxes can be a particularly daunting task. Entrepreneurs are haunted by questions like What if I make a mistake in filing my tax? Will filing tax return independently lead to an IRS audit? Where to start and what documents do I need to arrange before filing? Corporations can choose how they are going to be taxed and besides this, there are different corporate entities have their own tax forms and special deductions. Also you can contact Toll Free Number 📞 1-855-481-5333 for tax experts .
Before you start preparing for taxes, here is an easy 6-Step guide on where to start and things you should know while filing your business tax returns.
Business must file tax return annually with the IRS and determine their tax liability by ascertaining which event or transaction results in attracting a tax.
Process For Small Business Tax E-Filing
1. Gathering Documents For Tax Filing
- The first step in filing a return is to gather the documents like the Taxpayer Identification Number TIN, and;
- Financial records. Financial records like financial statements, supporting receipts and invoices, income statement, your business balance sheet during the beginning and the end of the year.
2. A Business Can Decide Whether To Be Taxed As S-Corp Or C-Corp
Businesses are automatically treated as C corporation as a standard or default during formation. Whereas, an S corporation chooses a special status for itself with the IRS and gets some tax advantages. However, a C Corporation has its own advantages like limited liability, perpetual existence, no share holder limit, but, since it is a limited liability establishment, there is a stringent govt. oversight on C Corporation.
For tax purposes, a C corporation is subjected to double taxation as it pays corporate income tax on its profits, and its shareholders also pay tax on the salary and dividends they receive. Form 1120 is also used to report income for an entity that has elected to be taxed as a corporation.
Businesses that want to avoid this double taxation choose to be taxed as S corporations and thereby do not pay at the corporate level. The corporation’s profits and losses are “Passed Through” to its shareholders’ personal tax returns, and its shareholders only pays tax on individual level on those profits at their “Personal Income Tax Rates”. S corps are pass-through taxation entities that file an informational federal return (Form 1120S)
3. Determining The Right Tax Form For Your Business
|Which tax return to file?|
|Sole Proprietorship||Schedule C|
|Partnerships||Form 1065 and Schedule K-1|
|Multi-member LLC||Form 1065 and Schedule K-1|
|LLC taxed as corporations||Form 1120|
4. Fill out your form
You can get the Schedule C or Form 1120 from the IRS website or use TurboTax It is a simple form with only 2 pages and lists all the expenses you can claim. When complete, just subtract the expenses from your business earnings to arrive at net profit or loss. Then transfer this figure to your personal income tax form and include all other personal income tax items.
5. What Are The Common Tax Liabilities For Business
Tax liabilities along with other current debts have to be reported. Failing to pay a tax liability can result in back taxes, interests, penalties, and even indictment.
Taxable events earned income tax liability, business tax liability, self employment tax liability, payroll tax liability, sales tax liability, capital gain liability, property tax liability.
Small businesses can deduct ordinary expenses and corporations can also deduct employee salaries and bonuses, employee health insurance, retirement plans, etc. Including these deductions will help you maximize your tax savings.
6. Pay Estimated Taxes
C corporations are bound to pay estimated corporate income tax, whereas S corporations are required to make an estimated payment for certain S corporation taxes. These estimated tax payments are to be made quarterly throughout the year.
Corporations that do not pay their estimated tax payments on time can be subject to interest and penalties for underpayment.
7 .File Your Federal Tax Return
As mentioned earlier, S corporation need to file tax returns on Form 1120S that shows your corporation’s income, expenses and losses. S Corporation also needs to fill Form K-1 for incomes, losses, dividends, deductions and credits to be reported on their personal income tax returns.
C corporations have to file a corporate tax return on Form 1120. Shareholders then report any dividends they received from the corporation on their personal tax returns.
8. File Your State Tax Returns
Your business may attract state income tax return depending on the tax status and the state where the corporation was formed. Usually, the corporate tax rate varies from state to state and is generally a flat percentage of income that varies from state to state. Businesses that operate in more than one state may attract state taxes for these additional states too.
9 .Know Your Deadline
Partnerships and multi-member LLCs
Fill Form 1065 and distribute Schedule K-1 to partners by March 15
Must file Form 1120-S by March 15
*Corporations with year ending on December 31
Submit Form 1120 by April 15
* For corporations whose tax year ends on a date other than December 31 – Their Due Date is15th April. In case of their fiscal tax year ending on June 30 – Must fill Form 1120 by the 15th day of the third month after the end of tax year.
**Note: Please note that due to COVID-19 the due date has now been extended. Here’s the extension dates .
- Tax Deadline Changes Due to COVID-19
The tax filing and tax payment deadline for 2019 IRS Tax Returns has been postponed to July 15, 2020.
- Most July 15, 2020 – 2019 – State Return(s) plus IRS Income Tax Return. State Return can only be e-filed in conjunction with a Federal Return due to IRS/State regulations.
- 01/15 – 10/15/2020 – 2019 IRS Tax Refund Estimate Date.
10 .Filing Methods
Business tax return can be filed through mail or through the IRS’s e-file system. Depending on your business, you might be required to e-file. Businesses can make a tax payment through the IRS’s Electronic Federal Tax Payment System (EFTPS). You can also explore more about How To eFile IRS Taxes Online .
TurboTax helps to prepare your taxes, through simple answers to questions. It can determine which form is needed and can help put the information in all the right places. You also get complete support and advice from tax professionals related to assistance with Schedule C, cost segregation, business deductions, & more.
Call our experts at the TurboTax 24/7 Support toll free Number 📞 1-855-481-5333 to know more about TurboTax easy tax filing.