Taxes are a crucial part of owning a business.
Most small business owners hate filing taxes. Not only is it time consuming, but the pressure to understand the paperwork and get it right could be intense.
Given how stressful taxes can be, we’ve written the guide below that will teach owners everything there is to know about them. That way, owners can get back to what matters most – growing a successful business.
1. Why It’s Needed
Owners and freelancers that are expected to owe more than $1,000 in federal taxes will need to file quarterly. This is because taxes are not automatically withheld on their paycheck, like it is in standard jobs. Instead, taxes are withheld which means owners must calculate the amount that should have been deduced in a quarter and send it to the government.
2. How to Calculate
There is a simple way to estimate the amount that a business owner or freelancer will owe. To calculate this, simply estimate the income that is predicted to be earned in the next quarter. All of the anticipated expenses and deductions for the year also needs to be calculated.
Once these amounts are gathered, they will need to be punched into IRS Form 1040-ES which automatically calculates how much is owed.
It is important to note that this amount could vary based on actual earnings and losses. So, try to be as accurate as possible since accuracy will prevent you from having to pay more at the end of the year.
3. When to File
Taxes need to be paid quarterly, which means there are four due dates. These dates are: April 15th, June 15th, September 15th, and January 15th (of the following year). It is important to mark these dates on a calendar or to set a reminder on a phone or app to ensure it’s not forgotten.
4. Apps Can Help
There are tons of tax programs specifically designed to help freelancers and business owners file their quarterly taxes. Although some of these have a fee, there are plenty of free programs that can be used to file, sort, and save copies of every receipt and payment throughout the year.
A favorite among owners is QuickBooks which is an easy to use software system that can also be programmed to send reminders and automate tasks. In turn, alleviating your workload.
5. Consider Deductions
Tax time doesn’t necessarily mean money will be owed. That’s because there are plenty of deductions, benefits and programs specifically designed to give relief.
Owners should take time familiarizing themselves with the ones they are eligible for and how to apply.
6. Seek Professional Help if Needed
It’s no secret that professionals (like accountants, advisors, and bookkeepers) make filing easier. They are able to assess a company’s financial standing, organize documents, and offer advice throughout the entire year, regardless of how small a business is.
Professionals are also well-versed in federal and state requirements, so busy owners don’t have to stress about researching forms or policies on their own.
Using the services of a professional also means that filings won’t be completed wrong. This could help protect owners from things like higher interest fees or an audit because they’ll have had all their books reviewed by someone that is experienced and qualified. Ultimately, ensuring that a business will be in good standing and that there won’t be a huge fine to pay at the end of the year.
Professionals will also understand the stress that every owner is under to file their taxes. So, if you’re an owner that’s struggling to file, consider calling us at 407-328-5001.
Image: Unsplash
