Tax Filing Strategies for Small Businesses

As a small business owner, you are required to pay several taxes throughout the year. If you fall behind, you will be subject to IRS penalties. This is an obligation that you must make sure that you complete on your own, but you don’t have to be the one to figure out the amounts that you need to pay. Hiring an accountant to complete this very important work for you may be the better option for you and your small business. First, we will discuss the tax payments you are required to pay.

When to Make Tax Payments for Your Small Business.

As a small business owner, you must make tax payments throughout the year. At the end of the year, you must have paid 90% of the taxes owed, and you must make these payments quarterly. The taxes you are expected to pay in this way are income tax, alternative minimum tax, and self-employment tax. 

Different Kinds of Taxes That You Can Expect in Your Small Business.

The Estimated Tax

Estimated taxes are taxes that you will pay quarterly throughout the year. You are expected to pay these taxes if you are a shareholder in an S Corporation, a partner in a partnership, a sole proprietor, or a C or S corporation. Failing to pay these taxes results in penalties, but failing to pay a sufficient amount of tax also results in penalties. 

The Income Tax

If you have a sole proprietorship, you must file the Form 1040 or the Form 1040-SR. In addition to that, you will need to fill out the Schedule C. If your business is a farm, you will fill out the Schedule F instead. 

As a Partnership, you and your partners must file the information return known as the “1065,” but individually, each partner must file Form 1040 or Form 1040-SR as well as Schedule E. If you are an individual shareholder in an S corporation, you will also need to file the 1040 or 1040-SR plus the Schedule E. 

The Employment Tax

If you have employees, you must pay the employment tax as an S corporation, a C corporation, a partnership or a sole proprietorship. Employment taxes are made up of the Medicare tax and the Social Security tax. You are required to pay half of this tax for your employees, and they will pay the other half. Also included in this tax is the income tax each employee must pay. The final portion is the unemployment taxes, and you are responsible for paying the entire amount. 

You may pay your employment taxes using Forms 941, 943, or 944, but you must pay your unemployment taxes with the Form 940.

Hiring a financial advisor will benefit you in more ways than one. The money that you spend on an accountant is a business expense, so you can deduct this expense from your taxes. You will need an SEC-regulated financial advisor, and you can find this person online. With an online service, you will be matched with an advisor who will address your goals and needs.