As tax season rolls around, companies and businesses of every size gear up to submit the ever-important tax return. Depending on how organized you were throughout the year, you might experience a flurry of reports and financial statements throughout the first quarter! Those who didn’t keep their books organized may struggle with providing personal information and income information, such as adjustments, tax deductions, and others mandated by the IRS.
Filing your taxes can be tricky, but working with expert accountants for entrepreneurs can help you get all the information you need and prepare well for tax season.
Information Needed to File Taxes
You must provide important pieces of information when filing your income tax returns, which fall under several categories. Here’s what to prepare:
By providing your personal information, you’re showing the IRS who’s filing the taxes, who’s covered in tax returns, and how refunds should be deposited. This includes your full name, birth dates for you and your dependents, your Social Security number, and the bank account information for refunds to be deposited in.
You’ll also be expected to provide all the income you and your spouse received from every employer you had in the past year. Don’t forget to state other sources of income other than salaries provided by employers!
There are various forms appropriate for every income type, as indicated below:
- W-2 forms to be filled up by you and your spouse, which are typically issued by your employers before January ends.
- 1099-MISC forms for independent contractor work
- 1099-C forms are used for debt cancellations
- 1099-G is for unemployment income or state and local tax refunds
- 1099-R form 8606 should be filled up for payments or distributions from IRAs or retirement plans
- 1099-INT, -DIV, -B forms are filled up for interest and investment income while
- 1099-S forms are applicable for income from the sale of properties
- Business income
- Rental property income
- Alimony received
- Miscellaneous income
After you’ve provided your income information, you can start to consider your deductions or adjustments to income that will reduce your total income and thus ease your tax burden. These include IRA contributions, student loan interest, educator expenses records, alimony paid records, energy credits, retirement plan contributions, health savings account (HSA) contributions, and premium payments for health insurance for the self-employed.
Check with your accounting tax services representative if you’ve exhausted all opportunities for income adjustments.
Tax Payment Records
How much you owe will be affected by the amount of taxes you pay throughout the year, whether it’s paid real estate taxes, personal property taxes, annual tax payments for the self-employed, and withheld tax for retirement plan distributions. When anticipating tax deductions for small businesses, entrepreneurs should make it a practice to keep state tax returns from the previous year on hand to help the filing process along.
Tax Deductions and Credits
Lowering the tax burden can also be done through different deductions and credits, including the following:
- Record of business use of a home, including square footage and utilities
- Mortgage interest summary
- Theft losses
- Charitable contributions (in cash and in-kind)
- Medical and dental expenses
- Child care expenses
Preparing for Taxes
First, attach a copy of the preparation checklist and indicate what is or isn’t applicable. Place the required documents in the folder and ensure that it’s checked off on the list!
Self-employed individuals should use online bookkeeping and taxes and accounting software to generate detailed income and expenses reports to record transactions for the tax year. Year-end bank statements should also accurately reflect your financial activity.
Submitting a tax return for yourself or your business can be made much easier with the help of the right tools, qualified professionals, and most of all, ample preparation. The last thing you want to do is to scramble around to prepare the necessary statements and reports last minute.
Experts can help you get organized and prepare for this tax season while simultaneously setting up your processes and systems to remain organized for next year’s tax requirements. By sticking to your checklist and knowing what’s applicable, you’ll have no trouble submitting your tax returns on time!
Whether you’re an entrepreneur or a small business owner, if you’re looking for professionals who can handle small business taxes near you, A4E has got you covered!
Contact us today to learn more about our packages for managing your books, taxes, and finances to help you focus on growing your business.