For a comprehensive tax preparation checklist, read on.
Keep business account separate
To avoid complications with an IRS audit of your business, you need to ensure that your personal finances don't mix with the business expenses. If that is the case, the IRS will start looking at the personal account due to the "commingled" factor. According to Brian C Jensen, this is why it is crucial to make separate bank accounts and credit cards for your business and keep your personal finances away from the organization.
The distinction between net and gross income – Brian C Jensen
Keep in mind that if your product costs more money to make than what you can charge for it, you will lose money irrespective of making plenty of sales. It is therefore extremely crucial to learn the difference between the net and the gross income. The gross income is just a number that allows you to calculate the vital net income, your actual revenue, after expenses.
Business classification is crucial
You can end up overpaying your taxes if you fail to classify your business correctly. When it comes to any business, you have several options, including C and S corporations, LLC, LLP, sole proprietorship, and many more. Keep in mind each classification has its tax demands, deductions, and effect on your revenue. Always consult your attorney before classifying your business.
Payroll management is vital since it adds to the final deductions. Keep in mind that it is pretty common to hire cheap third-party services to optimize the payroll division. However, hiring the best or having a fair bit of control over the agency will ensure payroll tax remittance for your company without fail.
Involve your accountant
A good accountant will keep the books balanced, but a great one will provide sound advice for your business. Ask for advice concerning the retirement funds, bonus schemes, and scheduled delays. Your accountant will always have a clearer understanding of the finances and profit margins.
Once you have all the details in place, the last on the list is the actual filing process. Get the green light from your team and accountant, and head over to file your returns. You can go for the e-filing process or go the paper file way; the choice is entirely yours. However, keep in mind that e-filing is quicker and hassle-free. Moreover, you will receive an immediate confirmation of the completed filing process through text alerts if you opt for the e-filing of your tax.
Stay on top of your taxes with our customized checklist from our business expert. File accurately and take care!