Familiarizing yourself with necessary tax-filing requirements is a crucial part of being a small business owner. While all of the rules and documentation can seem overwhelming, we’ll break down the basics of how to file business taxes online.
In this article, you’ll learn how to prepare business taxes, what forms you can file online, and details regarding business tax e-filing and payments.
- Failing to file your business taxes and make payments on time can have serious consequences.
- What taxes your business owes depends in part on how your business is structured and where it’s located.
- The IRS offers electronic tax filing and payment options for businesses. The IRS website provides detailed information regarding necessary tax forms and payment methods.
- You’re responsible for paying any applicable state and local taxes. Check with your state and local governments to determine your business tax obligations and available options for e-filing.
Don’t Neglect Your Business Taxes
If you’re a business owner, you have numerous responsibilities. Among your top priorities should be filing your business taxes accurately and on time.
Failing to file and pay taxes on time with the IRS can result in you owing back taxes, which often have severe consequences, such as penalties, interest, and seized business assets. You could also face challenges securing loans or other financing as lenders typically require copies of your tax returns before they approve funding.
If your business owes back taxes, don’t ignore the problem. You can get guidance from a tax professional who can help you create a plan for paying your tax bill.
How To Prepare Your Taxes
The way your business is structured as well as its location play roles in how your business is taxed. Businesses are required to abide by federal, state, and local tax rules.
Familiarize yourself with your tax requirements in advance, as you may need to pay taxes at different intervals during the year. The types of business taxes generally include:
- Income tax
- Self-employment tax
- Estimated tax
- Employer tax
- Excise tax
Business obligations, tax requirements, and necessary forms vary depending on the type of business tax. The IRS provides detailed information about the required forms on its website, which also has information about what forms can and can’t be e-filed.
Turn to your state and local governments for details regarding your state and local business tax responsibilities, which typically include income and employment taxes.
How To E-File and Pay Your Business Taxes
The IRS allows businesses the option to file federal tax returns online. If you have an income of $72,000 and less, you can file taxes electronically using IRS Free File, no matter if you are drawing a paycheck, are self-employed, or have a small business. If your business income is above $72,000, you can use IRS Free File Fillable Forms.
If you choose to utilize IRS Free File Fillable Forms, make sure you feel confident doing taxes, because you’ll receive little guidance using this method, and the system does not check for errors. However, it’s the only free option for taxpayers with income above $72,000.
You can use the IRS Modernized e-File (MeF) system for filing business income tax returns as well as employment tax returns. The IRS provides a list of approved Modernized e-File (MeF) business providers to choose from, depending on your filing needs.
Filing your tax paperwork then paying the IRS are two separate steps, so make sure to complete both transactions. You can pay your taxes directly through linking a bank account, or you can choose to pay with a debit or credit card.
You can also enroll in the Electronic Federal Tax Payment System, which is a free service from the U.S. Treasury.
E-Filing State Taxes
You’ll also need to make sure you meet state and local tax obligations, which will depend on where you’re located and the way your business is structured.
The best way to keep up to date with these regulations is to check with your state and local governments. Many states allow businesses to e-file their taxes and submit payments online as well.
You can look up your state tax requirements on the SBA’s website to determine your business’s state tax obligations.
Frequently Asked Questions (FAQs)
When are business taxes due?
Due dates for business taxes vary depending on the necessary taxes your business owes. Some taxes need to be paid on a regular basis throughout the year, such as quarterly, while others are due on the annual tax-filing deadline, which is usually in mid-April unless you file for an extension, which moves the annual deadline to October.
What receipts should I keep for business taxes?
Keep receipts from business purchases for three years so that if you’re audited by the IRS, you can show that the purchases were for business use. The IRS recommends keeping supporting business documents such as gross receipts, documentation for purchases, proof of expenses (including travel, transportation, entertainment, and gifts), and records to accompany assets.
Can I file an extension for my business taxes online?
Yes, you can file for a business tax extension online, and the forms are available on the IRS website. You should still aim to estimate and pay your taxes by the original due date. Extension requests need to be filed by the original deadline. Turn to your state’s tax authority for information regarding filing for an extension on the state level.