How to prepare tax for small businesses?

While operating a small business in the USA, you need to file the taxes properly as per the IRS regulations. Regardless of the type of business you have, small business tax preparation is always a hectic task for US-based businesses.

You need to have proper knowledge of all the legal regulations regarding it. If you want to prepare tax properly as per the regulations then you have to plan for it from day one. You need proper records about the financial transactions and accounting books initially.

What are common taxes that small businesses need to pay?

Here are some common taxes that are applicable for the small businesses:

1. Payroll taxes

Businesses that have employees must pay the payroll taxes including Medicare taxes and social security taxes. The amount of taxes depends on the gross wages of the employee.

2. Income taxes

These are the taxes incurred on the income to be paid to the IRS as per the federal tax requirements. Depending on the location and business structure the taxes will vary.

3. Self-employment taxes

The self-employment taxes are for the Medicare taxes and Social Security. The tax rate of self-employment will depend on the income earned on the business.

4. Property taxes

If the individual or business owns some property like building, land, etc. then property taxes are applicable to them. The taxes amount here will depend on the property value.

5. Dividend taxes

Dividend taxes are the taxes applicable to the dividends earned by the shareholders. The tax rate will depend on the investment length of the shareholders.

How to do small business tax preparation?

Here are some steps to do tax preparation for businesses in the USA:

1. Collecting all the records

When you prepare taxes, the primary step here is to collect all the business records. The transaction records will help to calculate the tax-deductible on the income along with a recording of all the expenditures.

2. Getting the proper Form

Depending on the type and structure of your business, you must fill out the proper forms while filing the taxes. Some of the forms depending on the business structure are:

• Sole proprietorship     – Schedule C attachment
• C-Corporations          – Form 1120
• S-Corporations          – Form 1120S
• Multi-member LLCs       – Form 1065

3. Pay taxes in the given duration

After filling out the correct Form, you need to pay the taxes before the given date. The filing can be either quarterly or annual. For proper reasons, you can also get extensions of date for filing the taxes.

4. Filing the taxes

After calculations of the income from different sources for your business, pay the applicable taxes accordingly. You can pay the taxes online and you will get a confirmation email from the IRS when all aspects are proper.

These are simple steps you can do while doing small business tax preparation for a US-based company. If you do not have professional resources then you can outsource this task to experts.

If you are looking to outsource small business tax preparation in the USA, then Meru Accounting is a nice choice. Meru Accounting has good experience preparing tax for US-based businesses.

They have proper knowledge on guidelines and help you reduce the taxes. Meru Accounting provides excellent accounting related services around the globe.