Every business owner is aware that the process of filing taxes is incredibly confusing and challenging. From maintaining details of all business transactions, receipts, cash flow, and profit & loss to ensuring that you’re taking advantage of all the deductions you’re entitled to, tax season can be pretty daunting! However, Cardiologist Brian C Jensen believes that knowledge is the key to power. Understanding the process and being aware of its multiple steps can make taxation ten times easier.
Steps to Filing Business Income Tax Return
Step 1 – Register your business
The first step in filing your business tax return is registering your business for tax purposes. This can be done by contacting the Internal Revenue Service (IRS) or the state tax authority in your state of operation. You will need to provide them with basic information about your business, such as your name, address, and contact information. Once you have registered your business, you will be given a Taxpayer Identification Number (TIN). This number will be used on all future tax returns and correspondence with the IRS.
Next, you will need to determine which form(s) you must file for your business taxes. The most common business form is Form 1120, Corporation Income Tax Return. If you are a sole proprietor, you will file a Form 1040, Individual Income Tax Return. Other forms may be required depending on the type of business you operate.
Step 2 – Gather your documents
Once you have registered your business, you must gather all the necessary documentation. This includes receipts, financial statements, 1099 forms, and W-2 forms. Organizing these documents ahead of time will make the tax-filing process much more straightforward. This includes your business license, if applicable, and any financial statements or tax records you have. The IRS has a complete list of what documentation is needed for each type of business return.
Step 3 – Determine your filing status
The next step is to determine your filing status. There are four options: sole proprietorship, partnership, corporation, or S corporation. Your business type will determine which level you should file under. The IRS offers several different options for business tax filing. There are four main types of business entities: sole proprietorships, partnerships, corporations, and LLCs.
If you are a sole proprietor, you will file your taxes as an individual. You will need to file a partnership return if you have a partnership. Corporations will need to file a corporate return, and LLCs can choose to file as either a corporation or a partnership.
Once you have determined your business entity, you will need to gather all necessary documents. This includes your income statements, expense reports, and any other documentation that will be required to file your return.
Step 4 – Calculate your taxes
According to Brian C Jensen, you will need to calculate your taxes after you have gathered all the necessary documentation and determined your filing status. This can be done using tax software, hiring a professional accountant, or doing it yourself.
Step 5 – File your return
The final and perhaps the easiest step is to file your tax return. This can be done online, by mail, or in person. Be sure to include all of the required documentation and forms.
Brian C Jensen believes that filing tax is a relatively straightforward process if appropriately understood. One only needs to proceed step-by-step in an orderly fashion.