What You Need to Know About Filing Your First Small Business Tax Return
April 3, 2019 | Last Updated on: July 18, 2022
April 3, 2019 | Last Updated on: July 18, 2022
As a new business owner, your first-time submitting business tax returns will be a different experience compared to that of an established organization.
There is no doubt that you want to pay as little taxes as possible, but you must properly file and account for every single business expense, as you don’t want to face penalties for tax evasion – this will only cause a number of problems in your company’s well being.
Instead, you can learn how to receive funds back through tax returns, particularly when it is your first time submitting these forms as a new business owner.
During your company’s initial stages, there were many expenses that you had to account for. The chances are that you had to get business loans in order to fund everything, but did you know that you can account for these as a deductible? Your industrial equipment financing, for instance, is one example of this. In other words, you can receive a portion of the money that you spent back.
Of course, there is more you need to be mindful about when it comes to filing your first tax return, and so here is an overview of the steps you need to follow in order to ensure that everything is completed efficiently and submitted before the April 15th deadline.
It’s only natural that your first step is to understand what a tax return is, to begin with. It is defined as follows:
A tax return is a form(s) filed with a taxing authority that reports income, expenses, and other pertinent tax information. Tax returns allow taxpayers to calculate their tax liability, schedule tax payments, or request refunds for the overpayment of taxes (source).
Whether you are filing a tax return as the owner on your personal income taxes or you are treating the business as a separate entity, such as in the case for C-corporation structures, you must account for a number of funds that you have spent or profits that you accumulated.
When you are filing your taxes for the first time, don’t underestimate the importance of knowing and understanding your tax rates. This will vary depending on the state that you are located in, and the forms you must submit will also differ based on what structure you set up for your business.
When it comes to your personal income taxes, the more money you make, the more taxes you will be accountable for paying, and when you factor in the state you are in, you may be required to pay even more taxes.
The State and Local Tax Deduction known as SALT has recently imposed a $10,000 deduction limit, meaning that certain business owners may be accountable for paying even more taxes than ever before.
Knowing this information, you should take some time to consider where you’d want to set up your company in the first place.
You can choose to submit your tax returns through the mail or in electronic format. Keep in mind that refunds will be issued within 21 working calendar days, and you will receive them much quicker if you process everything online.
You can check the status of your tax return through the IRS website!
When it is your first time submitting a tax refund, you will have a lot more to account for your company deductions. All of the necessary supplies that you purchased for the betterment of the business, such as equipment financing and supplies, the rent of the office space, salaries and wages paid to employees, among many other things, can be noted down as deductibles.
Remember, the amount of money you spent will be much greater within the first few years of your business, as you are still in the process of building everything up, ensuring that you have everything you need to efficiently perform day to day tasks.
Has your accounting department kept a record of all business purchases and profits that were made?
Some of these expenses include the list of items you can claim as a deductible that were mentioned in the previous section.
Ensuring that everything is organized internally is key, and the next order of business is to fill out the necessary paperwork. Form 1040 is filled out by individuals wanting to claim tax returns, and form 1120-W is used by C-corporations to submit tax returns.
When it comes to submitting your taxes as a whole, the deadline is April 15, 2019. In the event that your business needs an extension for whatever reason, you will need to fill out form 4868 on the IRS page ahead of time.
This will ensure that you are not liable to various late submission penalties, and most importantly, you don’t want to be charged with tax evasion under any circumstance.
There are people who are experienced and knowledgeable in tax procedures and acquiring help from a financial expert would benefit your business profoundly. Why scramble to understand all of the necessary paperwork, when you can get the help from a person that has years of experience in helping people and businesses alike to get the most out of their tax returns?
No matter how you look at it, filing your taxes, and doing so on time is essential for the sake of your company’s stability and wellbeing. As a new business, completing your first tax return may seem like a complicated procedure at first. However, remember that you don’t have to deal with this entire process alone.
Instead, you can count on your accounting department to ensure that all financial related paperwork is organized and kept in order, and you can seek their advice when it comes to filing personal and business taxes alike. Have you made sure that you have accounted for every single deductible you could think of, especially when it comes to equipment loans and other office expenses? Have you filled out the appropriate paperwork? Is the tax deadline on the top of your mind? These are the type of questions that you should consistently be mindful of, and your first set of tax submissions as a business should be smooth sailing.