7 Tips for Surviving Business Tax Season

Surviving Business Tax Season
Surviving Business Tax Season. JJRD/Getty Images

Tax Season has begun!  That means the IRS will begin accepting your 2016 business - and personal - tax return. As a business owner, you must not only prepare your business - and personal - tax returns, but you must also take care of year-end payroll tax reports for employees and non-employees (freelancers and contract workers). And, of course, there are changes in tax laws and taxing rates to consider.

 

But fear not. You can survive business tax season by following these simple tips: 

Tip #1 - Know the tax filing deadlines and tax changes

Tax deadlines change each year, depending on when due dates happen to fall on the calendar. 

Here are the due dates for 2016 business income taxes, by business legal entity type.

Every year, certain tax information changes, including tax rates, Social Security maximums, business mileage rates, and depreciation benefits.

  • This article about the 2016 tax changes details those changes, so you can use them in your tax preparation. 
  • For payroll taxes, you need to know the specific dates for submitting and filing annual wage and tax reports. For 2016, annual payroll tax reports for W-2s and 1099-MISC forms are due earlier - January 31. Read more about this change in annual payroll tax reporting requirements. 

Tip #2 - Get all of your tax information together early. 

I've prepared several Guides to small business taxes and to corporate and partnership taxes, including articles on all of the documents you will need to gather and use for your business tax return.

 

Your Complete Small Business Income Tax Guide, including Sole Proprietors, Partnerships and LLC's

If you are filing corporate taxes, here's a corporate tax guide that includes S corporations. 

Tip #3 - Get help with your business taxes.

Business taxes are complex, and depending on your business type, you may find yourself in over your head.

Getting help with business taxes means finding a competent tax professional who is familiar with your type of business. The sooner you find a tax professional in your area, the more time you will have to plan and work with that individual. 

Tip #4 - Use business tax software - maybe.

That depends on your business type and complexity. For a simple small business, you may be able to use one of the personal tax software applications that includes small business taxes on Schedule C. You can buy business tax software for partnerships or corporations, but you may find that you still need a tax professional to help you. This article compares three business tax preparation software programs. 

Tip #5 - Save money on tax return preparation.

You can save on tax return preparation by getting your documents together early, making sure you have all the calculations you need for your home business, and providing all the information your tax preparer needs. 

For example, if you have a home based business, read about the simplified option for taking a deduction for your home office space. 

Tip #5 - Understand your options for extensions. 

At some point in the business tax filing process, you - and your tax preparer - may consider filing an extension application for your business taxes.

While filing an extension may give you more time to prepare your business tax return, there are other considerations to this option.

By the way, if you are filing your small business taxes on Schedule C, you will be taking an extension on both your personal and business taxes, since the business return is linked to your personal tax return. 

Remember that even if you file an extension, you must still pay the tax due by the April due date. William Perez, Tax Planning expert, explains the pros and cons of filing an extension. 

Tip #7 - Play by the rules. 

It's sometimes tempting to try to slip a little on reporting income and exaggerate a little on taking deductions. But if the thought of being audited leaves you uneasy, or even sleepless, it's best to be completely transparent. 

For example: