As a small business owner, your taxes won't get taken out of your paycheck. If your business owes more than $1000 at tax season, the IRS will require you to pay them by making quarterly tax payments. You pay the IRS and your state government taxes four times per year, based on your estimated annual tax. If you pay these taxes late, you'll incur penalty fees. Your state also requires similar quarterly payments, unless you live in a state without state taxes.
Tax season is here, and it's time to start getting your business ready to file. Taxes for entrepreneurs and business owners tend to be more complicated than for employees, so we recommend using an accountant to help you file. However, even if you work with an accountant, there are ways to prepare your finances using basic accounting skills that make the process easier and help lower your filing-related costs.
Here are four things we recommend doing before meeting with your accountant:
Filing and paying taxes is a part of doing business, but as a small business owner writing the check is often the least painful part of the process. Filing tax forms is a real hassle if you leave it until the deadline is staring you in the face.
If you don't have a back-office staff, you'll be the one gathering all the information you need to satisfy the IRS, consuming time and resources you don't have. But it doesn't have to be that way. Preparing for tax season isn't a one-time event, it's a continuous process. If you start now, you can avoid the last-minute scramble. Outsourcing your bookkeeping needs is a good first step to getting a handle on your taxes. But if you want to do it yourself, here are some other tips: