How to Do Small Business Taxes

When you start your small business, you may not be thinking of the paperwork needed to meet state and federal tax requirements but if you intend to stay in business, learning the basics is imperative. Unlike other aspects of your business, preparing your taxes requires adherence to strict guidelines. By creating a tax routine, you'll make tax time easier.

Instructions

Difficulty: Moderate

1. Prepare a tax calendar. Unlike an employee, you will pay taxes on a monthly or quarterly basis, depending upon your income level. In addition, you will deposit withholding taxes for your employees monthly. List every due date on your calendar and highlight them for quick reference.
2. Get your tax ID number. All small businesses use a number issued by the federal government. Fill out form SS-4 online at irs.gov. Go to "Forms and Publications." You will need to file a separate form for your individual state ID number (see Resources below).
3. Take a small business accounting class in order to learn the basics needed to record transactions, calculate depreciation and make sure you're saving all the pertinent information for taxes.
4. Expedite your tax work by purchasing accounting software that figures your tax liability after you input your transactions. Look for a program that helps you set up company accounts and classify expenses.
5. Make an appointment with a tax accountant for advice. Even though you will be doing your own small business taxes, consulting a certified tax accountant once a year will allow you to learn the new tax laws and filing procedures. Tax regulations change on an annual basis and a tax accountant can advise you for a small fee.

Tips & Warnings

• If you're overwhelmed by the thought of doing all your taxes, consider a compromise. Learn the basics of transaction recording, payroll, withholding and quarterly reports and allow a certified tax accountant to file your annual income taxes to ensure you're getting all the deductions you're entitled to receive.