Businesses must be aware of the tax deductions and credits available to them in addition to maintaining the organizational records necessary for tax preparation. After that, all of this tax preparation and filing must be finished before the deadlines set by the government.
With a combined experience of more than 10 years, our tax professionals can help you with tax preparation, tax filing, disclosure & compliance, transactional tax issues, and audit representation.
To determine your tax liability, you must file your tax return with the IRS each year. Since the IRS has reportedly been targeting small businesses for tax audits recently, it’s critical to make sure your tax return is accurate.
You can experience some anxiety if you’ve never filed taxes before as a small business owner. You will be accountable for filing taxes regardless of whether you are a self-employed person or a small business owner.
You can follow the instructions in this article to complete small company tax returns.
Documents Required for Filing Small Business Taxes
When it comes to taxes, you need to gather a variety of accounting records and business data. Make sure you have all the necessary paperwork before filing your taxes by downloading this small company tax checklist.
Small Business Tax Checklist
Sole Proprietorship or Partnership
|Other income information|
|Business income and expense|
|Invoices, receipts, payroll information, and GST/HST return|
|Financial statements and trial balance|
|Invoices, receipts, payroll, bank statements|
|Previous year’s, payroll, bank statements|
|Previous year’s tax returns|
|Incorporation papers (copy)|
|Latest Notice of Assessment|
|Employee deductions payable|
|Fixed asset continuity schedule|
|Gross receipts for sales or services|
|Returns and allowances|
|Business bank account interest (checking/savings)|
|Machinery and equipment|
|Invoices for all capital assets purchased or sold in filing year|
What are the Methods by Which we can File Taxes?
In past, Individuals and companies used to manually fill out all of their tax documentation. Today, however, many people choose to file their taxes using software because it is easier and takes into account human mistake owing to technology.
When filing taxes, there are normally three basic alternatives available. These include using tax software and submitting your returns online, using software and mailing your returns, or using a professional service to file them on your behalf.
Some of the best ways to file taxes are:
- Tax Software: The tax preparation software you use must be approved by CRA. Let’s say you are employing unapproved software. If so, this indicates that it does not adhere to the requirements of the government and should not be used.
- Filing of Taxes Online: After filing your taxes, you can submit your files online using a variety of CRA e-services.
- Use of NETFILE: An additional electronic service that enables people to file their taxes online is NETFILE. It is a transmission service that enables qualified to electronically submit their personal income tax returns to the CRA. You must first have NETFILE-certified tax software in order to use NETFILE.
- File Tax via Mail: If you choose to file your taxes by mail rather than online, you will need the tax centre mailing address to send the CRA your income tax and benefit returns.
How to File and Pay Your Small Business Taxes
To keep organized while preparing your small business’ taxes, use QuickBooks’ checklist.
To keep organized while preparing your small business’ taxes, use QuickBooks’ checklist.
Getting all of the Documents Together for Filing of Tax:
For the purpose of reporting your business income and costs, you must gather all of your company’s records.
Identify the IRS Tax Paperwork you Require:
The IRS forms you require depend on the structure of your organization.
- Single Proprietorship: Using a Schedule C IRS file form is necessary if you operate as alone proprietor. People must include their Schedule C with their personal tax returns. A Schedule C-EZ Form is appropriate for use by some small enterprises.
- Corporations: The corporate tax return Form 1120 (or Form 1120S if you’re in an S-Corporation structure) must be used if you’re a corporation.
- Limited Liability Companies: Depending on how the business is taxed, LLCs take on several forms. Utilize a Form 1120 if you want to tax your company as a corporation (C Corporation). The Form 1065 is filed by multi-member LLCs, while the Schedule C is filed by single-member LLCs.
- Partnerships: Use of Form 1065 is required for partnership business tax returns. IRS reports on company losses and gains are required from both partners and the partnership. Each partner receives a copy of the Schedule K-1, Partner’s Share of Income, Tax Credits and Deductions. In order to finish their individual tax forms, the partners use the Schedule K-1.
Complete the Tax Forms:
For the average taxpayer, completing tax forms can be challenging. However, you may keep organized by using accounting software and other tools.
Knowledge of Your Deadline:
The deadline for submitting your personal income tax return or corporate tax return can fall on a holiday or a weekend in some tax years. The new tax due date is the following business day if that happens.
You already know how vital it is to keep organized as a business owner-you need to manage invoicing, inventory, website, payroll, staff, and everything else. Being organized when it comes to the due date of your business taxes is vital.
The deadline for completing a Form 1065 with the federal government and distributing a Schedule K-1 to partners for partnerships and multi-member LLCs is March 15. Form 1120-S for S Corps must be submitted by March 15th.
You must submit your Schedule C by April 15 if you operate as a sole proprietor or a single-member LLC.
Form 1120 must be submitted by April 15 for businesses whose fiscal year ends on December 31.
The fifteenth day of the fourth month following the conclusion of your tax year is when you must file your tax return if your fiscal year finishes on a date other than December 31.
Filing of Tax for Small Business:
E-filing your taxes with the IRS will speed up the process. You can get your tax refund quicker since e-filing is quicker and simpler than mailing.
Don’t forget that hiring a certified tax professional is cost-effective if you’re worried about appropriately paying your taxes.
A professional can ensure that you adhere to tax regulations, make the proper tax payments, and comprehend your tax refund.
Understand Your Extensions:
Do you have to postpone your deadline? To submit your business tax return later, you can apply for an extension. Just be sure to submit the extension request prior to the cutoff date to avoid penalties.
How to Filing of Taxes with the Help of QuickBooks
Online filing of business tax returns makes the procedure simpler and expedites completion, regardless of whether you’re a sole proprietor, a board member of a corporation, or anywhere in between. Even more ease can be added to the process with QuickBooks. Accounting software not only organizes your finances throughout the year but also makes tax season run more smoothly. Correct software used in conjunction with online filing can assist reduce errors and save time.
Payroll support is another feature of QuickBooks. You are required to pay income taxes, Employment Insurance premiums, and Canada Pension Plan payments on behalf of any employees you may have. Each time the program draws a check for one of your employees, QuickBooks’ payroll features compute these sums.
Additionally, the software keeps track of these deductions and creates PD7A forms, which are necessary for filing payroll taxes. You can file a return online at the website of the Canada Revenue Agency (CRA) to provide this information to the government. Your payroll form can be found in the list of saved files on your computer. Select a file to send via the internet.
In order to file tax returns of your employees, you may utilize QuickBooks to assist you prepare other frequently used tax documents including records of employment and T4 slips. With online filing, you can avoid driving to the post office, waiting in line, and other inconveniences. As an alternative, you can handle things from almost anyplace with internet connectivity.
Goods and Services tax:
It’s likely that you charge your customers for goods and services tax if you sell taxable items or services. Depending on where you reside, you might be required to collect either provincial sales tax or harmonized sales tax, a hybrid of the GST and PST.
These tax requirements can also be helped by QuickBooks. Based on the location of your business, the kinds of goods or services you sell, and the volume of each transaction, the program may automatically calculate sales tax payments. The program then generates a report including the data you want in order to pay your sales tax online using My Business Account. Your time spent trying to sort out the various sales tax responsibilities can be greatly reduced with that assistance.
You can use the time you save by using software to simplify your taxes to work on things that will bring in money for your company. Your tax deductions can be maximized with QuickBooks Online. Take home extra money today.
Income Tax Returns:
In addition to your T1 general income tax return, small business owners are required to submit Form T2125 (Statement of Business and Professional Activities). Form T2 for Canadian corporate taxes must be submitted if you are filing income taxes on behalf of a corporation. You need information about your revenue, business spending, and capital assets in both of these scenarios, and your QuickBooks accounting software makes it simple to get that data.
To manually transfer information from one to the other, you can simultaneously open your QuickBooks online account and your tax preparation program. You may rapidly transfer the data from your accounting records to your tax forms if you utilize tax preparation software that is QuickBooks compatible, like TurboTax Business. In addition to accelerating the process, this removes errors brought on by manual entering.
Preparing of Small Business Taxes on QuickBooks
QuickBooks may help you save a lot of time and work by allowing you to produce precise end-of-year reports on your business income, profit and loss, payables, and more, when it comes to filing your taxes. If you’d like to have a professional handle everything, QuickBooks has a feature that lets you create a copy of your data specifically for the accountant. But if you decide to conduct your own tax filing, QuickBooks saves the information in a format that can be imported into Intuit’s Turbo Tax software.
Preparing of the Report in Every Year:
- Open QuickBooks on your computer. A menu will appear; select Reports, Profit & Loss Standard, and then Company & Financials. The Transaction Date drop-down list should be set to Last Fiscal Year, after which click Run Report. To print a printed copy of the report for use in preparing your tax return after seeing the report, click the Print button.
- Select Accountant & Taxes from the drop down menu of Reports on the toolbar. The Transaction Date drop-down list should say Last Tax Year, so select that and click Run Report. By selecting Print, the report can be printed.
- Then click 1099 Summary under Reports, Vendors & Payables, and so forth. Printing the 1099 Summary is done by clicking Print.
Creating of Copy of Books:
- Click File in the navigation bar after starting QuickBooks. Click Save File once you select the Accounts Copy.
- Then click next after selecting Accountants Copy. Then click next after selecting the last day of the tax year in the Dividing Date control box.
- Go to the folder you want to save the accountant copy of the QuickBooks backup by clicking the Save In drop-down list and then selecting the folder. Fill out the File Name section with a meaningful file name for the QuickBooks file. The accountant’s copy of the file can be saved by clicking the Save button.
When you run your own business, one of the regular expenses you’ll have to deal with is paying your small business taxes. Although it can be challenging to use on your own, QuickBooks is there to assist. The user-friendly software which provides you reports, earnings, and other helpful data. Due to this software you can relax knowing that tax season won’t leave you confused and anxious.
Looking for a professional expert to get the right assistance for your problems? Here, we have a team of professional and experienced team members to fix your technical, functional, data transfer, installation, update, upgrade, or data migrations errors. We are here at Dancing Numbers available to assist you with all your queries. To fix these queries you can get in touch with us via a toll-free number
+1-800-596-0806 or chat with experts.
Frequently Asked Questions
What do You Mean by Business Taxes?
A small business is also obligated to pay taxes to the federal government and the state, just like an individual is required to do so on their personal income tax return (depending on where you live). You may also be required to pay local taxes in specific circumstances.
Your business income, tax obligations, and tax deductions are all listed on your tax return.
An Employer Identification Number (EIN) is required in order to file your taxes with the federal government (EIN). It is your federal tax identification number, or EIN.
You might be required to pay taxes as a company that cover:
• Self-employment tax
• Approximate tax
• A sales tax
• Property tax
• Tax on excise
• Payroll taxes (Social Security, Medicare, Federal income tax withholding, and Federal unemployment tax or FUTA)
What Possible Tax Breaks Exist for Small Businesses?
You might be able to use tax deductions to lower the amount of taxable income from your company.
• Food for Clients
• Travelling for Work
• Home Office Expenses
• Occupational Insurance
• Using a car for work
• Pension Contributions
These are but a handful of the possible tax deductions that may be applicable to your company; a tax preparer may be able to assist you in discovering more ones.
What do you mean by Self-Employment Tax?
The self-employment tax must be paid by business owners who are self-employed or work as independent contractors.
Social Security and Medicare taxes are included in the self-employment tax for people who work for themselves.
Is it is Possible that I can File Small Business Taxes with my Personal Taxes?
Depending on how your firm is set up, you may be able to file both your business and personal taxes. An entrepreneur who runs a corporation is required to file corporate taxes separately from personal taxes. On the other hand, sole proprietorships and partnerships that operate small enterprises must submit their company taxes on their personal income tax returns.