If you’re like a lot of other small business owners, you drag your feet until the last minute to file and pay your taxes. It’s getting down to the wire, folks, so even if you want to wait until April 15 to file your taxes, you still have a lot of work to do to prepare.
1. Decide: DIY or Professional?
Your decision here can determine how easy it is to get your taxes filed. If you’re filing them yourself (easiest for solopreneurs with simple tax situations), you might need more than a day or two to do so. Start blocking off time to sit down and go over your taxes. If you’re planning to hire a tax professional, it might not take as long to do, but you’ll be competing for that pro’s time. Book your appointment now so you don’t miss the deadline.
2. Consider an Extension
If you’ve been frantically working to pull together all the necessary documents to file your taxes, but still don’t have them, you can file an extension. This can get you up to 6 months to work on your taxes. It’s not ideal, but sometimes it’s the best option.
3. Gather Your Documents
From 1099s to profit and loss statement, you’re going to need everything that represents your financial transactions in the past year. If you’ve kept good records in your accounting software — or if you have an accountant — this will be a breeze.
4. Ready Your Tax Deductions
If you work with a tax professional, this will be easier, but it’s wise to start listing the expenses you think qualify for tax deduction, such as your home office, travel expenses, and office supplies.
5. Know How Your Business Structure Affects Filing
Are you operating as a C corporation? If so, you’ll need to file two tax forms: one for the business, and another for your personal income, which will include the dividends you’ve received from the business. For sole proprietors, LLCs, and S corps, you’ll file everything on your personal taxes.
6. Get Your Important Numbers Ready
In addition to having the proper paperwork handy, you’ll also need either your social security number, which you probably have memorized, or your employer identification number (EIN) to file your taxes under. If you don’t know that one by heart, look it up.
7. Get a Payment Plan
Even if you haven’t filed your taxes yet, it’s a good idea to think about how you’ll pay what you owe. If you have the money set aside, so much the better. If not, you’ll need to set up a payment plan. Keep in mind: you’ll need to owe $25,000 or less in payroll taxes to qualify for a payment plan with the IRS.
8. Decide How You’ll File
If you’re going DIY, will you use paper forms or tax-filing software like TurboTax? There have been some great deals on TurboTax on Groupon, so if you keep your eye open, you might be able to save some money (that you can then put toward your taxes!). Also, you may qualify for the IRS’s Free File program if your income is low.
9. Get Your Questions Answered
Who wants to call the IRS hotline this time of year? Instead, use the Interactive Tax Assistant from the IRS to make sure you know what you need to before filing.
10. Tie Up Loose Ends if You Closed a Business
If you closed your business in 2014, you still may owe taxes for last year, so plan to still file them. Check with the IRS to fill out the appropriate form for your business structure.
11. Do the Math
If you are a consultant or freelancer and receive 1099s, make sure the total for all you’ve received matches your profit line on your balance sheet. If not, go with the bigger number. Not all of your clients are required to send you a 1099 if they don’t pay you over $600, so trust that your invoice system has recorded what you need to report.
12. Estimate Your Taxes
If you plan to file an extension, you will still owe taxes on April 15. Estimate what you owe and pay it, if possible. Otherwise, see #7 and set up a payment plan.
13. Don’t Wait Until April 15
Just because that’s the last day you can file without penalty doesn’t mean you should. Business taxes often take a while, and if you find out at your accountant’s office that you need another form, you simply won’t have time to get it before the deadline if you procrastinate. Better to get it done early than to get hit with a late fee.
14. Plan a Little Rejuvenation Afterward
Tax time is stressful! Plan to reward yourself after you file with a day off or some pampering. Consider this a fresh start to a new tax year!