With record-keeping and quarterly payments, small business taxes and planning is a year-round event for the small business owner. But inevitably, tax-related activities take on a new sense of urgency as April 15 looms near. While tax time can seem overwhelming for the time-pressed small business owner, there are many online tools and forums available to make the process a little easier and stress-free.
Preparing and Filing Your Small Business Taxes
Sitting down with a professional who specializes in small business is always a smart idea, particularly during the first year or two. However, not every business owner wants to shoulder the costs of hiring an expert to help fill out relatively routine fields on their Schedule C.
If you opt to use an online or software-based tax preparation tool, be aware that not all solutions (particularly the free tools) accommodate business tax filers. Before you sign up for any service, download software, or invest time filling out your information, make sure that the service supports the common business forms.
Great Tools Available for Small Businesses
- IRS e-file: The IRS offers electronic filing options for Employment Tax Returns, Information Returns, Partnerships, Corporations, Estates & Trusts, plus Exempt Organizations.
- TurboTax: A popular tool for personal income filers, TurboTax from Intuit also offers software to guide small businesses through the filing process. The software helps you make sure you’re taking advantage of every business deduction and write-off. A sole proprietor, consultant, 1099 contractor, or single-owner LLC should use the Home & Business version; S Corps, partnerships, C Corps, or multiple-owner LLCs should use the Business version. Free e-filing is included in both versions.
- H&R Block Tax Software: Two versions are available for businesses: Premium & Business (LLCs, S-Corps, C-Corps) and Premium (sole proprietors). Even if you decide not to pay for the tax filing software, check out H&R Block’s small business tax preparation checklist as a great starting point to get organized and make sure you’re thinking about every possible expense and income source.
- Tax Act Business: Tax Act has separate federal and state editions for business tax forms 1065, 1120S, and 1120.
Managing Your Paper Receipts
Whether you’re a road warrior or work strictly from the home office, you’ll probably find yourself overwhelmed with the amount of receipts accumulated throughout the year. All too often, receipts are stuffed into pockets, end up on the car floor, are run through the washing machine….and every lost or illegible receipt represents a missed opportunity to deduct a well-deserved expense for your business.
If manually managing paper receipts in a file system and spreadsheet isn’t working out for you, here are two interesting options:
- Shoeboxed: This service takes the paper receipts off your hands. You can scan your receipts and upload them to your Shoeboxed account. Or, you can mail in the paper receipts and they’ll handle the scanning and data entry for you. There’s also an iPhone app or you can take images of receipts with a digital camera. Online, you can sort your receipts, create charts and graphs, and export data to Quicken, Excel, or PDF. There are different monthly and annual plans, as well as a free trial.
- NeatReceipts: You can purchase your own portable scanner from NeatReceipts which lets you scan receipts (up to a full-sized document) to your PC or Mac. You’re able to export data to PDF, Excel, Quicken, QuickBooks, and TurboTax.
Getting Help Online
Whether it’s your first or fifteenth year as a business owner, you’re bound to run into tax-related questions from time to time. Does deducting my home office really increase my chance of an audit? How can I deduct my health insurance? When traveling for business, are there limits on the amount I can deduct for my meals? Can I deduct the parking ticket I got while visiting a client?
If you haven’t hired a CPA or tax preparer, don’t despair; you can still find answers to your specific questions online. Browse through community forums and post your own questions online. You’ll get answers from business owners just like you. Of course, as with any online community, the quality and accuracy of answers may vary. But hopefully, the ‘wisdom of the crowd’ will filter out the incorrect or less than helpful information.
Here’s a short list of various online forums catering to the small business owner and self-employed individual:
- Small business and self-employed tax center at the IRS: The IRS has been beefing up its online resources and the small business tax center offers FAQs, tax tips, help videos, and more. Most importantly, they offer highlights of the year’s tax law changes… for example a new deduction for health insurance costs in computing self-employment taxes for 2010 (part of the Small Business Jobs Act). There’s also good information on home office deductions.
- Intuit Community: Intuit offers some fantastic resources for the small business owner. While not specific to tax filings per se, Intuit’s Managing Business Finances forum lets business owners post and answer questions on a full range of business finance issues (including taxes and deductions). And at Intuit’s TurboTax Live Community, you can pose questions and browse community discussions on tax preparation. (For full disclosure, I sold my first incorporation filing service to Intuit back in 2005).
- H&R Block Get It Right Community: Your questions are answered by certified CPAs and tax advisors.
- About.Com Business Taxes: While not a community forum, this About.com site compiles some useful information and articles for small businesses, such as Tax Tips for Freelancers or Depreciation Definition.
Of course, trying to get your head around all the deductions and forms is not easy, particularly when you’re just starting out. The IRS estimates that filing your own business taxes will take approximately 52 hours. Keeping your finances in order throughout the whole year can help immensely come tax time. If this is your first year filing business taxes, be sure to learn from the experience. For example, if gathering the details and documentation for a section (like your mileage deductions) is particularly time-consuming, take some time to think about what you could do throughout the year to improve the situation when it’s tax time next year.
One other thing…if you are operating your business as a sole proprietorship (aka DBA or under a Fictitious Business Name), you may consider incorporating your business or forming an LLC. The different corporate structures offer different benefits. CorpNet can help you to choose which structure is right for your business. Our Free Incorporation Guide explains the features of the various corporate entities. To further help you choose, read our Free LLC Guide to understand how this structure differs from a corporation.
As you journey through the process, be sure to take each stage seriously. CorpNet.com’s professional staff is here to assist you every step of the way… And once you know what you’re required to file, we can take care of the details for you! If you have specific legal questions or concerns, you should consult an attorney for sound advice. After all, your business is worth it.
Please feel free to reach out to me with any questions to firstname.lastname@example.org. And don’t forget to look for help online!
This original content by Nellie Akalp was written and published in the small business section of the AMEX Open Forum.