Running a successful business with satisfied customers and fulfilled employees is hard enough without adding the complexity of filing taxes each year.
Of course, as a business owner, you need a basic understanding of the implications of filing your taxes properly as well as the support and guidance necessary to do so as well as a good idea of what could happen if you don’t file properly. The following are some tips on filing your business W2s and other tax filings as well why you should trust a payroll expert to do the job for you in many cases:
Correctly Classify Your Business
Determining whether your business should be classified as a Limited Liability Company, S Corporation, Limited Liability Partnership, C Corporation, S Corporation, Single Member LLC, Sole Proprietor, or other classification will affect how you do your taxes. Therefore, it’s important at the beginning of the process to choose the right classification.
Take Every Deduction Available
After determining your business’s classification, the next tip that will ensure you are handling your business taxes correctly is to take every deduction available. Of course, knowing what can and cannot be considered a deduction can get complicated. Therefore, if you don’t already have an experienced tax preparer who can walk you through this process, that is a worthwhile business expense that will pay for itself exponentially.
Correctly File Your W-2 Forms
According to the IRS, the due date to file W-2 forms is January 31st of the following tax year. This means, for example, that for the year 2019, you would have to submit all tax information for your business by the end of 2020. Your business must file W-2 forms if you withheld income, social security, or Medicare tax from wages for your employees, regardless of the amount of wages they earned. You must also file if your employee claimed more than one withholding allowance. You also need to know your employer identification number and state ID number to submit these forms.
General Tips on Tax Filing and W2s
Consider the following general tips for filing your tax forms as a business owner:
Federal Tax Forms: What Forms Will You Need as a Business Owner?
- Wage and tax statement: Form W2 (outlined above).
- Your Employer's Annual Federal Unemployment (FUTA) Tax Return: Form 940
- Your Employer's Quarterly Federal Tax Return: Form 941.
State and Local Income Tax
Here are some common local issues you could inquire about with your own local government agencies to find out about taxes, permits, and licenses required in your area:
- State Income Tax.
- Permits.
- Licenses.
- Sales Tax.
Managing Tax Filing: Have an Expert Set a System in Place For You
Did you know that according to the IRS some 35% of small business owners will be hit with a tax penalty at some point during the lifecycle of their business? Often these business owners were not doing anything wrong on purpose but simply neglected to file the right forms or something equally innocent. This percentage of business owners who have had this experience is astounding and proves the value of minimizing this risk by having an expert on your side. After all, why wouldn’t you minimize the risk by allowing the experts to file and then assume tax liability, freeing you from that worry?
Just consider the fact that you would need to keep all the government and state and local deadlines and know when to file what, set up monthly, quarterly and annual reports, along with running a successful business. Not having to worry about all these deadlines and just focusing on your business's development and customer growth along with eliminating your tax liability is the single BIGGEST highlight of outsourcing!
