Tax season can be a headache for enterprises, especially if you fall behind and find yourself scrambling to gather pertinent information. You can avoid this problem with a little initiative. Simply follow this guide for business owners looking to learn more about managing their business taxes.
Keep Records Throughout the Year
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If you've ever scrambled to get your personal financial information in a row before the tax deadline, you know what a hassle it can be to find income and expense data at the last minute. But for a business owner, taxes are considerably more complicated. This means that the problems associated with poor recordkeeping and organization are considerably worse for companies compared to individuals. You can avoid this by preparing for your taxes throughout the year rather than waiting until the last few weeks before the filing deadline.
Understand How Taxes Work for Businesses
Companies are subject to specific tax laws, and while you don't have to know them all in great detail, you do need to know your obligations as a business owner. For example, it's vital that you separate business and personal expenses.
In addition, remember to claim all income reported to the IRS and confirm that the amount you report matches the total listed across all 1099-MISC forms you've received.
Address Back Taxes
If you can't pay what you owe when you file taxes, you have what the IRS calls back taxes. These accumulate every tax season you can't pay what you owe, so it's easy to fall into debt if you're not careful. Ideally, you'll budget for taxes carefully throughout the year and will keep current with the IRS. But sometimes, back taxes are unavoidable. Luckily, you've got a few options to help you address back taxes.
Installment agreements are one of the most common solutions. Depending on how much you owe and other restrictions, you may set up an installment agreement to clear your debt by dividing payments over several months. You can also make an offer in compromise, which will allow you to pay less than the full amount owed. Other forms of tax debt relief are available, as well.
Get Professional Help When Needed
Each of the above options for paying back taxes comes with pros and cons, so it's important to weigh your options carefully. Working with a tax professional can also help if you are struggling with this issue; having an expert on your side can ensure that you negotiate the best outcome for your business.
Of course, you don't have to wait until you fall behind in payments to seek help. Many companies manage their taxes with an in-house team, and those without the budget for dedicated accounting personnel can find help by hiring a professional for assistance when taxes are due.
Taxes can be a tough subject for businesses, and it's easy to wonder if you're missing anything in terms of what you owe. Stay on top of your taxes by following the steps listed above, and remember to get professional help when needed, whether you need a way out from under back taxes or you simply need a trained eye to review and submit your taxes.