Paying business taxes for the first time can be an intimidating and arduous process. From choosing a business entity to learning about applicable tax breaks, there’s a lot to digest. To make your tax planning and preparation smoother, Satty, Levine, & Ciacco created a list of tips for new business owners.
Helpful Hints for Paying Business Taxes
Starting a business comes with many firsts, including paying business taxes for the first time. Since the rules of business taxes differ from those of individual taxes, there’s a few things you need to know before filing.
Choose the Right Business Entity for You
The IRS has several different business tax categories. The one that you pick can influence how you file your taxes and how much you owe when your taxes are due.
The most common choices include:
- Sole Proprietorship
- Limited Liability Company (LLC)
- S Corporation
Pick an Accounting Method
There are two different methods of accounting you could use: cash and accrual.
The cash method, which is simpler, is mostly used by small businesses. Other companies choose the accrual method, because it provides a more accurate picture of profitability.
Document all your Income and Expenses
When operating a business, documentation is one of the biggest keys to effective tax preparation. It’s a good tool for helping owners accurately report income and expenses to the IRS. Being meticulous about income and expenses records will ultimately make your life much easier at tax time.
Learn about Available Tax Breaks
State and Federal governments offer incentives for companies paying business taxes.
For example, your business could be eligible to lower your tax bill with incentives like the General Business Credit or the Work Opportunity Credit.
If your company doesn’t take advantage of applicable tax deductions and credits, you are quite literally leaving money on the table.
Start Tax Preparation Early
The best tax preparation is a year-round process. If you have maintained accurate records throughout the year, you will be in a good position when it’s time to start filling out IRS forms.
If you have any questions along the way, feel free to reach out to us. Satty, Levine, and Ciacco is available to help your organization with tax planning and preparation today.