How To File Business Taxes
This day and age, with the abilities of the Internet, many people own small businesses, but the one thing that throws them off is the question of how to file business taxes. In order to understand how to file business taxes, you must break things down.
- Be organized. From the beginning, keep your records in some sort of organized manner. It is not necessary to hire a CPA, purchase an accounting software package, or do anything elaborate in order to file business taxes. You can simply group your expenses into various categories based on the type of expense and file them in separate folders until the end of the year. However, if the business grows to a large size and has a large volume of transactions, this process will become very labor-intensive. At that point, a software program or accountant may become a better choice.
- Determine the business form. In other words, is it a sole proprietorship, corporation, partnership, or limited liability company (LLC)? This will determine how you will file business taxes, as there are various different rules for the different types of businesses.
- File the proper forms with the IRS. The forms that you will be required to use will depend upon whether the business is a sole proprietorship (Schedule C), partnership (Form 1065), corporation (Form 1120 or 1120-S), or LLC (varies depending on numerous factors). For information regarding which forms you should file, please consult the IRS website. The forms have detailed instructions that accompany them, and the IRS website has numerous publications to help you file business taxes.
With all of the information that is available at the IRS website, if you remain calm and work through the process one step at a time, you can file business taxes without the aid of a tax professional, as long as your situation is not too complicated.