What To Know About Small Business Taxes

What tax form should my small business file?

A sole proprietorship and single-member LLC should file Form 1040, Schedule C. A partnership or multiple-member LLC should file Form 1065, U.S. Partnership Tax Return. An S corporation should file Form 1120S, U.S. Income Tax Return for an S Corporation. A C Corporation should file Form 1120, U.S. Corporation Income Tax Return. A nonprofit organization should file Form 990. There are three types of Form 990, including Form 990-N, Form 990-EZ, and Form 990. It depends on the annual revenue received as to which of these three forms the organization should file.

When are the tax forms due each year?

The Form 1065 and Form 1120S are due by March 15. The Form 1040 and Form 1120 are due by April 15. The Form 990 is due by May 15.

Should I attempt to prepare my own business tax return?

It’s best to hire a trained professional, such as a CPA or Enrolled Agent, to prepare the tax return. These professionals are required to keep up with the current tax laws through continuing education each year. They also are required to earn continuing education hours in ethics relating to tax practice so that you can be confident in their professional knowledge and expertise. Tax professionals are trained to be knowledgeable in business deductions that could be overlooked by the business owner.

Is there anything that I can do to help reduce the preparation fee charged by a tax professional?

Organizing and maintaining accurate accounting records each year can decrease the time that the tax professional needs to review the numbers of the business. If you use a small business accounting software package, such as QuickBooks Online, you can have the daily transactions downloaded automatically from your bank into QuickBooks. This provides the assurance that all transactions have been recorded. Reconciling your ending checking account balance with the bank balance at the end of the month is easy and quick when QuickBooks is used and kept current.

Does a business need to own a business vehicle to be able claim a vehicle deduction?

If a business owner uses his/her personal vehicle for business, then the owner needs to keep a mileage log to track the date, starting and ending mileage, and purpose of the visit. The owner can then be reimbursed by the business at the IRS standard rate for business travel. For 2024, this rate is $.67 per mile. A business owner doesn’t need to own a business vehicle to claim this deduction.

Can the business pay my life and health insurance premiums?

A business can pay these expenses for the owner but these expenses aren’t deductible expenses. These are considered to be personal draws.

Can I take a customer to lunch and claim a business deduction?

In 2024, a small business can take 50% of the cost of customer lunches paid at a restaurant for a business purpose as a deductible business expense.

When should my business start paying estimated taxes?

If a sole proprietor, partner, or S corporation shareholder expects to pay $1,000 or more when filing Form 1040, then estimated payments should be made during the year. These quarterly payments are due by April 15, June 15, September 15, and January 15 each year. Payment voucher forms, or Form 1040-ES, are available on the IRS website.

When I’m interviewing a CPA for tax return preparation, what questions should I ask?

A CPA should be asked about his/her educational background, experience, license, types of clients served, fee structure, return turnaround time, availability all year, recommended ways to minimize taxes, and other business services that are offered.

Our CPA firm provides tax preparation, tax planning, and tax consulting services. For more information, call today at (727) 391-7373.