Preparing your taxes for the first time as a small business owner can be intimidating and scary. You may not know exactly where to start, and you may be subject to more complex filing requirements such as needing to file your taxes monthly or quarterly.
While taxes can feel burdensome, taking early action and being prepared can go a long way toward minimizing the worry that you are experiencing. If you are wondering where to start when filing your taxes and which forms to use, read on to understand the basics for small businesses.
Reporting Profits And Losses Annually
Even if you are filing taxes quarterly, you will still be obligated to file your annual tax return with the Internal Revenue Service (IRS) each April. When doing so, you must report the profits and losses of your business by filing Form Schedule 1040C.
Do I Need To File Taxes Quarterly?
Whether you need to file taxes quarterly depends on your business structure. If you are a sole proprietor, you will not be obligated to do this. However, if you are a small business that has employees, you will be obligated to file taxes on a quarterly basis using Form 941. These filings are concerned with the taxes that you withheld from your employee’s paychecks for things such a Security, Federal Income and Medicare.
Accounting For Excise Taxes
If your small business manufactures or sells certain products, you may have to pay an additional tax known as an excise tax. An excise tax is an indirect tax, and the rules determining which products carry an excise tax vary from state to state. However, a good example of a product that carries excise taxes is cigarettes. If you are unsure if you are liable for excise taxes, consult the IRS’s Publication 510.
If you are filing your tax return for the first time as a small business, make sure that you get the guidance you need so that you fulfill your obligations.