How to Tax Filing for Small Business Owners?

How to Tax Filing for Small Business Owners?

Doing taxes can be hectic, more so if you are running a small business. Although one might not understand the process involved, it is not difficult. Here, we will outline the process of filing taxes in detail and provide you with clear instructions on how to do it so that you don’t have to stress about tax season when you have your own business to worry about. If you are worrying about income tax return filing, then this blog is here to help.

Step 1: Gather Your Financial Records

The first and essential procedure to follow while filing for taxes is to assemble all your monetary statements. These include:

• Income statements
• Expense receipts
• Bank statements
• Previous tax returns

This way, you will stay organized throughout the year and when it comes to filing your taxes, you will not struggle.

Step 2: Choose the Right Tax Form

There are various options when it comes to the type of tax form that small business owners can file. The most common forms are: The most common forms are:

• Form 1040: This is for people with a business and trade or miscellaneous receipts and expenses in the communication industry.
• Form 1120: This is for the companies.
• Form 1065: This one is for partnerships.

Ensure that you complete the right form for your business type and enter the appropriate details. In case of doubt, the services of a tax consultant can be sought for assistance.

Step 3: Report Your Income

After that, you will be required to indicate all the revenue that your business made throughout the year. This must include the sale of goods, provision of services and all other sources of income. Always be truthful and avoid omitting any little income you might have earned since this is strictly prohibited and anyone caught will be in for a penalty.

Step 4: Deduct Your Expenses

Expenses incurred in the course of business can be claimed as business expenses which in effect, lessen the amount of tax that can be imposed on the business. Common business expenses include:

• Payments for rents for office space
• Supplies and materials
• Advertising costs
• Travel expenses

That is why you should ensure that you retain the receipts as well as other records of your expenses. Avoid charging off expenses that you do not need and which are not exclusively related to your business.

Step 5: Calculate Your Taxes

That is the last step after declaring your income, and then subtracting your expenses to arrive at your taxes. This may be cumbersome and this is why there is software that can help you do this or you hire the services of an expert. They can help you determine the correct amount of taxes that you need to pay and help you claim for any tax relief that might be applicable to you.

Step 6: Income tax is one of the most important taxes and it is mandatory for every individual to file his or her tax returns.

After you are through with your taxes, you can now go ahead and submit your tax returns. They can be completed online, or the forms can be mailed to request the records. Online filing is always more efficient than the traditional method of filing documents. Ensure that you file within the set time to avoid incurring any additional costs, such as fines.

Common mistakes you must avoid:

• Not Keeping Receipts: It is always wise to keep copies of receipts of expenses incurred for business. The deductions are necessary to explain the key points of the case.
• Missing Deadlines: Failure to meet these taxes leaves you with penalties. There are certain important tax dates which you need to remember and mark in your calendar.
• Underreporting Income: The important thing to remember is when filing your taxes, declare all the income you have received. Consequently, underreporting is undesirable and can result in severe penalties.

How Mind Your Tax Can Help?

At Mind Your Tax we deal specifically with the filing of income tax of small businesses and their owners. Our experts will help you on filing income tax and time it properly so as to avoid any problem. We provide services for income tax return filing in Bangalore and have your back when it comes to any questions or concerns about deductions.