The year is winding up, holidays are approaching, and many of us are daydreaming of Christmas trees and eggnog by the fire. But if you own a business, the holidays bring a reminder of a less cheerful prospect: tax season.
No one likes dealing with taxes, finding the right filing services and trying to get prepared to pay your taxes. But ensure your business taxes are properly taken care of. Because, If they aren’t, the IRS has been known to take all the cheer out of the holidays.
But filing your taxes online can be a great way to make tax season easier and more convenient this year. Read on to learn more about how to file your taxes online this year and what online tax filing services can do to help.
Why Pay Taxes Online?
In 2018, 92 percent of American taxpayers filed their taxes online. There are a lot of good reasons for this, the biggest of which is the convenience of e-filing. If you file your taxes online, you don’t have to fill out tax forms by hand, double-check everything, and remember to mail in your documents.
E-filing can also help you get tax returns from the IRS more quickly through direct deposit. This can also help prevent theft in either direction, either sending in your return or receiving your refund. Mail disappears, but with e-filing, you don’t have to worry about someone stealing either your confidential tax information or your refund check.
Our team can always help with any online filing services. If you have any questions at all, we’re here for you 24/7 – just give us a ring at (855) 900-1040 and one of our certified tax professionals will gladly help you out.
Get Your Records in Order
The first step to filing your business taxes online is to get your records in order. It’s going to be very important that you keep these documents well-organized because you’re going to need to access them a few times throughout the year. Start by pulling together your personal tax information (Social Security number, date of birth, current address, etc.) and your employer identification number (EIN).
You also need to hang onto any invoices you sent out to clients the previous year. You’re going to need records of any goods and/or services you sold to customers during the year. This includes any other sales records that track any money coming into your business.
Pro tip: It doesn’t matter how small of an amount, you’ll want to ensure you’ve tracked everything down to the penny.
On the expenses side of things, gather up receipts for your business’s rent, office supplies, mileage records, and any other money you spent on or for your business in the year. Get the records of your employees’ salaries, and grab your tax returns from the previous year as well. Have everything above? You’re well on your way to successfully finding the right filing services next.
Pay Estimated Taxes
Part of the reason it’s so important that you keep these files on hand? Depending on your business structure, you’re likely going to need to file estimated taxes throughout the year. You file these every quarter based on what the IRS estimates your taxes will be for that quarter. This may seem like a pain, but it sure helps soften the blow come tax time.
The best way to get your estimated tax amount is to take your total tax liability from the previous year and divide it into four. You can pay those taxes through the IRS’s Payment Gateway. If you’re a corporation, you’ll need to file through the Electronic Federal Tax Payment System.
Find the Right IRS Forms
Do you already pay your estimated taxes quarterly? At the end of the year, you’ll still need to file a full tax return. This is when you’ll do an official accounting of what your tax amount for the year is. Depending on how accurate your estimated filings were, you may get a return. If not a return, you may just need to pay a little more in taxes to make up the difference.
Which form you use to file your annual taxes will depend on what sort of business you are. Sole proprietorships, LLCs, and different types of corporations all have different tax forms they have to use. You’ll almost certainly need to utilize a few different forms throughout the year as well. If you’re ever unsure- just ask us and we’ll get you prepped in time.
For Sole Proprietors
If you’re a sole proprietorship or an LLC with just one member, you won’t need to file a separate business tax return. Instead, you’ll add a Schedule C tax form to your personal return. The Schedule C form is only two pages long and is fairly self-explanatory.
When you’ve finished filling out your Schedule C, subtract your total business expenses from your earnings to get your net profit or loss. If you plan to take itemized tax deductions, you’ll need to fill out and file a Schedule A form. If your total income is less than $66,000, you can use the IRS’s Free File software to file your taxes online; for incomes over $66,000, you’ll need to use their free fillable forms.
note: click here for instructions on filling out the Schedule A form.
LLCs with Multiple Members
If your company is a partnership or an LLC with multiple members, you’ll need to file a small business tax return. You’re going to need to fill out Form 1065, and each member of your LLC will get a Schedule K form to fill out. This will show each person’s profit or loss from the company throughout the year.
Each partner will report their Schedule K form on their personal return, and other than that, they won’t need to file a separate return. However, Form 1065 can be complicated to navigate on your own, so you may want to work with a tax professional on that form. If either partner in your business has unreimbursed business expenses they want to report, they can use a Schedule E form.
If you have a C corporation or an LLC that you choose to operate as a C corporation, you’ll need to file a business tax return separate from your personal return. You’ll use a Form 1120 for this filing, as well as the personal return you file. While you will need to pay taxes on behalf of your business, you’ll also have to file personal taxes for your income from the business.
At a glance, Form 1120 looks similar to the Schedule C form that sole proprietors or LLCs fill out. But this form is more complicated and detailed than the Schedule C form. It’s a good idea to get professional help with this form if you don’t have professional accounting experience.
If you have elected to run your business as an S corporation, you’ll fill out a variation on the C corporation form, Form 1120S. You’ll also need to fill out a Schedule K-1 on your personal taxes to report your share of profit or loss from the company. You’ll also use Form 1120S to claim any deductions relevant to your business.
The IRS provides instructions for filling out Form 1120S, but like most corporate tax forms, it’s complex to get right on your own. It’s a good idea to work with a professional online filing service to make sure you get everything correct in case of an audit.
If You Hire Contractors
Many small businesses choose to work with contractors throughout the year. No matter what sort of small business you run, if you paid more than $600 to a contractor in the last year, you’ll need to fill out a Form 1099.
Form 1099s have to be ordered through the IRS, so be sure you take care of that before the deadline of January 31. Also, make sure when you pay contractors that you get their relevant tax information.
One of your best options for filing your taxes online is to use a free filing program. The IRS has partnered with thirteen different companies (that we’ll discuss later) that provide this service. These companies will fill out your tax forms for you based on a series of questions without you ever having to make any calculations.
While these companies do offer free filing options, most of the free packages don’t have the functionality you need as a business owner. But many of them offer affordable packages ($100 or less) that can provide the care you need. It is important to note that many of these companies only manage federal taxes, not state taxes.
Free Fillable Forms
If the free filing option sounds a little too hands-off for comfort, you can also opt for free fillable forms. The IRS provides all the required tax forms to file a return for free. You can fill these out through the IRS’s website and still avoid the hassle of filing paper taxes.
These free fillable forms will handle basic calculations for you on your tax forms. But they do not do any error checking, so you have to make sure everything is filled out correctly.
Which Filing Services Work The Best?
Which option you choose between free filing and free fillable forms depends on your business and your expertise. If your business makes more than $66,000 a year, you may not even be eligible for any of the free packages from the free filing companies. Using free fillable forms could help save you a little bit of money.
But free fillable forms don’t provide the same level of guidance and double-checking that the filing companies do. If you don’t have some sort of background as an accountant, it’s a good idea to work with one of the filing companies or a professional tax accountant. You don’t want to make a mistake and wind up in trouble during an audit a few years down the line.
IRS-Approved Free Filing Services
The IRS has approved thirteen different companies to provide online tax filing services. H&R Block and Intuit’s TurboTax are two of the most popular of these companies. Liberty Tax, FileYourTaxes, and ezTaxReturn.com are not far behind those two giants.
Other eligible companies include 1040 NOW Corporation, Drake Enterprises, Free Tax Returns, OnLine Taxes, TaxACT, TaxHawk, and TaxSlayer. You can trust that any of these services will provide you with safe and reliable free tax filing. It’s best to choose from one of these thirteen companies if you choose to go with the free filing option.
Choosing a Company for Filing Taxes
The best place to start when you’re shopping for an online tax filing services company is to take a look at their different package options. See what each group offers and which of their packages will fit your needs. Then compare pricing the different package options offer from each group.
If a few groups offer the same pricing for viable packages, take a look at the other support they offer. Some companies may offer one free state filing option, or they may have different prices to add on state filing services. Also, take a look at their reviews and how often their customers get audited.
Filing State Taxes
In most cases, the filing companies will not include state taxes as a part of their package price. You can choose to handle this either by purchasing their state filing addendum or by filing separately on your own.
Which option is best for you will depend on how complex your company’s finances are and how intricate your state’s laws are. If this is your first time filing as a business, it’s a good idea to get professional help with this portion of your taxes. If that turns out to be simple this year, you can file state taxes on your own next year.
Applying for an Extension
Online filing services can make things more convenient, but sometimes you may still not be able to make the tax deadline. In this case, you can file for an extension. This will give you some more time to get your taxes together before you’re in trouble with the IRS.
Even if you apply for an extension on your taxes, you do still have to pay your estimated taxes on time. The extension just gives you some more time to file your full return.
Get Help with Your Business Taxes
Filing business taxes can be confusing, but using online filing services can make things much simpler and more convenient. Be sure to work through one of the companies the IRS recommends and have all your paperwork where it’s easily accessible. These services can help you get an accurate return filed to ensure you get as much back from your taxes as possible.
If you’d like to make sure your taxes have been filed properly, get in touch with us at Silver Tax Group. We’re real tax attorneys who can handle everything from audit defense and tax fraud investigations to unfiled tax returns and emergency tax services. Contact us today and get your tax worries resolved.