While April 15 is the official IRS Tax Day, March 15th is actually when business taxes are due. Even though these dates might seem still far off, to make filing your business taxes this year easier, don’t put off your preparation. Even if you’re waiting for tax documents like 1099s from clients, there is still plenty you can do now to get ready to file your business taxes in a few weeks.
- Start a File Folder
If you’re a contractor and expect to receive 1099 or other tax forms from clients, they’ll start to trickle in this month. By law, you’re supposed to receive all 1099s by January 31, but it’s not uncommon for some of those to come in late.
Label a file folder “taxes” so you have an easy place to store these forms as they come in. You’ll add to this folder in the coming weeks, so keep it accessible.
- Print a Profit and Loss Statement from Last Year
Even if you’re a few weeks away from filing your taxes, you can still get a sense for how much income you’ll be taxed on, as well as how much you spent on tax-eligible expenses like payroll, office supplies, and business travel.
You should be able to create this report for 2014 from your accounting software. Once you print the statement, stick it in your tax folder.
- Send Your Own 1099s
If you work with freelancers or other contractors that you paid $600 or more to in 2014, you need to file the 1099 IRS form. The deadline to get this form to your contractors is January 31, while the IRS doesn’t need it until February 28.
If you’re scrambling to gather addresses and social security numbers for the people you need to create 1099s for, make it easier on yourself for next year and ask them to fill out a W-9 now so you have that information ready in 12 months.
- Start Thinking About Your Payment Plan
You likely will have to pay something for your small business taxes, so consider whether you’ve got enough money in savings to do so. If not, get a plan to set aside a healthy chunk between now and when you file your taxes.
If you can’t pay the full amount you owe in one payment, don’t sweat it. The IRS is willing to work out a payment plan with you.
- Meet with a Tax Professional
If you’re incorporated, your taxes are complicated. Find a tax expert who specializes in small business taxes. They will better know what you can use as tax deductions or an adjustment to income, and you might actually pay less than you think you might owe!
March will sneak up on you quickly if you let it, and don’t forget you also need to file personal taxes too, unless you are operating as a sole proprietor. If you do your prep slowly between now and then and you have all your necessary documents, tax time won’t be a major headache.
“Taxes Key Shows Tax Or Taxation” courtesy of Stuart Miles / www.freedigitalphotos.net
Thanks for these tips, Melinda. They’ve been incredibly helpful in getting my business taxes prepared for the next year. Would you suggest meeting with a tax professional?
Great post about tax preparation. My dad has his own small business and often has to file an extension because he isn’t ready in time for the tax deadline. I think I will share your suggestion about thinking ahead about his payment plan. This should help him a lot!
All of these tips that you give on how to prepare your business for the coming tax season was very helpful. The fifth suggestion, however, really stuck out to me. You talk about how meeting with a tax professional will help you to understand the complicated process and will help advise you on the types of deductions that you will qualify for. Overall, I think that hiring a professional will help make doing your taxes a lot faster and will help you to understand the process a lot more thoroughly. Thank you for sharing!
Thanks for your advice! I will try me best to keep it up.
I really liked this post! I have a close friend who just started a non-profit company, and this is going to be his first year doing his taxes. I think that these tips would be able to help him a lot with the process. In your post you mention how he should meet with a tax professional to help him get the most out of his tax return, which I don’t think that he has planned to do. I’m going to send this article to him and suggest that he look into hiring someone to help him with his taxes as soon as he can. Thank you for your post!
Kael–
I’m honored that you would pass my post on. Thanks!
Melinda