When filing taxes, small businesses should be diligent in record keeping, evaluate deductions annually, use tax act provisions and tax credits, and avoid IRS auditing traps, advises the U.S. Small Business Administration. Required taxes include income tax, estimated tax, employment tax and excise tax, cautions the Internal Revenue Service.Continue Reading
Consistently organized and accurate record keeping is the primary key to efficiently handling small business taxes, reports the U.S. Small Business Administration. Because possible deductions change annually, business owners should assess deductions on a year-by-year basis. Small business owners are able to save on taxes by utilizing a number of provisions in the Small Business Jobs Act and to claim tax credits to help with employee health care premiums stipulated in the Affordable Care Act. Small businesses should avoid audits by classifying employees and independent contractors properly, claiming only qualifying home office deductions, keeping details on every large deduction, and separating personal and business expenses.
Businesses in most locations need to pay both federal and state income taxes, according to the U.S. Small Business Administration. Small businesses must pay estimated federal income taxes quarterly or face fines, warns the IRS. Small businesses are responsible for depositing and reporting employment taxes such as Social Security, Medicare, unemployment and withheld federal income tax. Small businesses should find out if they may have to pay certain types of excise taxes, depending on the services and products they offer.Learn more about Income Tax