Small businesses often struggle with business tax preparation because the task seems overwhelming and they don’t always have all their documents in order. Below are some tips to help these business owners with document preparation and collection to make filing their taxes easier.
Gather Income Documents
Create a day-to-day checklist that includes all income sources and record this information. The income included on this checklist will vary according to one’s business, but will often include items such as receipts from sales or services, returns, sales records, rental income, tax credits, etc.
Expenses
Businesses also need to keep track of their expenses to deduct the proper amounts from their tax returns. Allowable expenses include advertising, computer equipment, phones, internet expenses, travel expenses, transportation, asset depreciation, insurance costs, rent, etc. The exact list of qualifying expenses depends on one’s tax situation and business, which is why it’s helpful to hire an accountant to review eligible expenses.
1099-Forms
Businesses that hire independent contractors need to make sure they have their 1099 documents ready to send. A 1099-NEC form is required when a business has paid more than $600 to someone not on the payroll for rents, services, or awards. The form must be sent by January 31st or businesses could face penalties for late filing.
The above information is only a brief overview of some of the business tax preparation a small business will need to do. For complete business tax preparation tips, contact accounting services. The professionals at InSiteCPAs have a team of tax professionals ready to help small business owners fulfill their tax filing obligations.
