According to Benjamin Franklin, nothing in life is certain except death and taxes. Incorrectly filed taxes can be the death of your business. The answers to these common business tax questions could help keep your business alive.
It depends on your business and if you pay business taxes through your personal taxes.
They are information returns that serve different purposes.
Business taxes can be paid over a calendar year or a fiscal year. Due dates can vary, but the IRS lists these common tax due dates.
Designating a worker as an employee or an independent contractor boils down to who has the most control. You have to consider who controls what the worker does, who controls what the business does and how the worker and the business understand the relationship.
A worker is usually considered an employee if the business owner controls how often they get paid, how they perform their job and if they are full-time or part-time. You can also submit a Form SS-8 to the IRS and they will decide for you.
Only items that are necessary for doing business are deductible. This includes computers, office furniture and office supplies. You may be able to deduct the cost of home office space, portions of your utilities and internet access if you operate your business from your home.
Only business expenses are tax deductible. Personal expenses such as clothing, traffic tickets and dry cleaning cannot be deducted on business tax forms. Many other items are also not deductible. The IRS can provide a more extensive list.
All businesses need a tax identification number. The kind of ID you need depends on your type of business.
There are some cases where partnerships don't have to file taxes if they have no income. Partnerships should consult the IRS for specific details. Corporations have to file information forms if they have no income to report.
Every business must pay one or more of the following four taxes.
Partnerships, S Corporations and the self-employed may need to pay estimated taxes in increments throughout the year. How much you pay is determined by completing Form 1040-ES Form 1120-W.
The key to surviving tax season is understanding how taxes work for your business. Don't be afraid to ask questions or to hire an accountant to make sure you're following all the rules. The more you understand about filing business taxes, the less likely taxes will be the death of your business.