Frequently Asked Questions about your Business Taxes Answered
Most small business owners know the general routine for preparing to file their business taxes, but may have one or two key questions they need answered before sending everything to the accountant for filing. Here are some of the most commonly asked questions about business taxes from small business owners.
Are there any tax changes?
Your business accountant will have a thorough understanding of any changes which occur from year to year, and when you have a meeting with him/her, you can get a full explanation of them.
Which kind of information do I need?
All types of small businesses must calculate business net income on a balance sheet, and on a P&L statement. Apart from that most important information, you’ll also have to gather up paperwork for business purchases, any deductions you intend to claim, and the correct form for your type of business.
How do I calculate COGS for Schedule C?
You start with a beginning inventory cost, then add the cost of any inventory accumulated throughout the year. Then you subtract out the cost of your year-end inventory balance, and the resulting figure represents cost of goods sold.
Can I deduct business expenses?
Most legitimate business expenses can indeed be deducted, although there are specific limits on some of them. To find out which ones are deductible, and which have limits imposed, consult with your accountant.
Do I still need to file if I don’t owe business taxes?
Yes, regardless of whether your business had a profit or loss, and regardless of whether you owe business taxes or not, you must file all the same.
What if I can’t pay business taxes right now?
If you can’t pay the amount you owe on business taxes, the IRS may grant you a 120-day extension, although it will impose interest on the amount you owe. You might also be able to arrange an installment plan which will be acceptable to the IRS.
Which form should I use?
This will depend on your legal business organization. Sole proprietorships and single business partners can use Schedule C, while corporations will have to use either Form 1120 or Form 1120-S.
When are business taxes due to be paid?
Partnerships and S-Corporations taxes are due on March 15th, and all other business structures have until April 17th to pay their business taxes.