As a small business owner, you have enough on your plate as it is. Worrying about year-end tax planning and tax preparation can add unnecessary stress and take away valuable time that could be better spent working on your business. We’ve created a checklist that can help you get organized and prepared for tax season to ensure you don’t miss out on any deductions.
Determine Which Form to File and When to File
Each business type has a different filing requirement for tax time. The first step in preparing for tax season is making sure your entity structure and filing requirements are in line with your expectations. You can figure out which form you need to file by using the table below. You should double check your tax ID letter received from the IRS along with any additional paperwork filed by your accountant or your attorney.
Corporation Type | Forms Needed | Due Date |
Sole Proprietorships | Form 1040 (Schedule C): This form is filed with your personal tax return. There is no separate business filing for sole proprietorships. Sole proprietorships are businesses that operate under a DBA or a personal name with no entity structure in place. | April 15th, October 15th with extensions |
C Corporations | Form 1120: This is a separate business filing with corporate level taxes due. If you have a corporation, verify that you did not file form 2553 to be taxed as an S-corporation. | April 15th, October 15th with extensions |
S Corporations | Form 1120-S and Schedule K-1 for shareholder info: S-corporations are generally incorporated as C-corporations or organized as LLC’s. These entities then elect to be taxed as an S-corporation by filing form 2553 with the IRS. | March 15th, September 15th with extensions. |
Partnerships | Form 1065 and Schedule K-1 for individual partnership info: This form is filed by information partnerships as well as many LLC’s or LLP’s with multiple partners. Each partner receives a K-1 stating their share of business income. | March 15th, September 15th with extensions. |
LLC’s | Varies – LLC’s can be taxed as sole proprietors, partnerships, or S-corporations. Confirm how your entity is taxed with your accountant or lawyer. | Varies depending on tax treatment |
Verify Business Information and Personal Information
Be sure to gather and verify the following information prior to filing your business taxes:
- Verify the tax ID number reported on the form matches the tax ID number given by the Internal Revenue Service on form CP575
- Confirm the address of the business has not changed. If it has, be sure to report the new address and mark any address change boxes listed on your business tax forms.
- Confirm the address of any shareholders receiving a form K-1 (if applicable) has not changed. You’ll need to confirm this annually with each shareholder individually.
- Be sure you have a name and tax ID number for each shareholder or owner of the business
- Verify your accounting method. This can be cash, accrual, or a modified accrual method. Check your prior year filing. If this is your first filing, consult with a professional accountant to determine the most optimal accounting method.
Organize Your Financial Data
Categorize and total all expenses
This part is best done using accounting software. If you do not have accounting software, we recommend getting a subscription to Quickbooks Online and importing all of your bank data to get this done efficiently. If you don’t pay for accounting software, you can categorize each transaction in a spreadsheet and create a pivot table.
If you don’t know how to categorize your transactions, check out our article to determine what expenses are deductible and what they’re made up of.
Gather receipts for new asset purchases
Asset purchases are large purchases of equipment or property that will be used in your business for more than one year. These items should be added to a depreciation schedule and deducted over a period of time that is determined by the tax code. There are also opportunities to take bonus depreciation or section 179 depreciation to expense these items in the year of purchase. Consult with a professional to see if your assets qualify for special depreciation.
Create Financial Statements
Profit and loss statement
This is a report that totals all income and expenses. It’s also known as the income statement. You will need this in order to properly file your income tax return. Again, it’s best to prepare this using accounting software whenever possible. This is especially true if your entity files a 1065, 1120, or 1120-S. If you file your taxes yourself, you’ll need to know which line each of these items ends up on. If you want to save yourself some time this year and get things done right, contact us to have us file for you!
Balance sheet
This report shows the total assets, liabilities, and equity of the business. This report is required for most 1065, 1120, and 1120-S forms. Even if it is not required, it is generally a good idea to prepare this form to ensure the accuracy of the rest of your financial data. For example, verify that your bank account balance matches your year-end bank reconciliation. You can also verify all loan balances to ensure you haven’t missed any interest expenses on your loans. An accurate balance sheet helps you verify that your profit and loss statement is accurate and that you haven’t missed out on any valuable deductions.
Need an Accountant You Can Trust?
Tax filing is complicated and can cause huge headaches for business owners. At Casey Moss Tax, we file tax returns for hundreds of businesses and individuals. Let us guide you through the process and make getting your taxes done as painless as possible this year. Contact us today for a free consultation!
