As a business owner, you must file company tax returns. If you have a home-based business and are the sole employee, taxes just became a lot easier. Nonetheless, there is basic but important tax information you should know before getting started, plus tips on ways to make the job even easier.
Home Business Tax Deductions
When starting a company, many entrepreneurs wonder what they can write off. Just remember this: tax deductions have to be ordinary and necessary to the business.
There are a variety of areas where businesspeople can deduct expenses. For instance:A few areas are equipment, advertising, travel and meals, insurance, repairs, rental fees, worker pay, etc. In addition you can write off the business use of your home and car. IRS Publication 535 has additional details on write offs.
If you maintain documented receipts and good records of expenditures on a consistent basis, tax prep will be less stressful. Utilize a separate credit card for business charges. Don't mingle personal and business accounts. If you choose not to use an accountant, many people suggest that you get a basic accounting program like Quick Books Pro or Quick Books Simple Start. These programs organize both income and expenses so that preparing income tax returns is less work.
Tax Return Forms
The tax forms you need for a particular business will vary, based upon the way the company is set up (a sole proprietorship, corporation, s corporation, limited liability company or partnership). You can download and print the forms from the IRS website, along with directions for filling them out.
According to the IRS website, people who run a sole proprietorship or limited liability company fill out a 1040 individual tax return along with a Schedule C Form, profit or loss from business. Corporations use form 1120 while S corporations use form 1120-S. Partnership companies use form 1065.
Tax Software Programs
A tax professional can be hired to complete company returns, or you can do the work. Like individual tax prep software, tax services sell do-it-yourself tax prep programs for small businesses. Also available are programs that combines business and personal tax preparation software in one. Purchasing a multi-software package most times is discounted and can be a great deal for small internet businesses on a budget.
Well known companies such as H&R Block and Intuit sell combination home and business software that can be purchased for less than $100. For those who prefer not to download and install anything, Tax Act offers a web-based program that is available on the web without having to install any software.
Tax preparation service done by a pro can cost $500+, so there is a big cost savings to doing the work yourself. However, tax consultants typically have knowledge of particular write-offs which the general public would otherwise miss, and they can certainly save you a lot of time completing forms.
Home Business Tax Deductions
When starting a company, many entrepreneurs wonder what they can write off. Just remember this: tax deductions have to be ordinary and necessary to the business.
There are a variety of areas where businesspeople can deduct expenses. For instance:A few areas are equipment, advertising, travel and meals, insurance, repairs, rental fees, worker pay, etc. In addition you can write off the business use of your home and car. IRS Publication 535 has additional details on write offs.
If you maintain documented receipts and good records of expenditures on a consistent basis, tax prep will be less stressful. Utilize a separate credit card for business charges. Don't mingle personal and business accounts. If you choose not to use an accountant, many people suggest that you get a basic accounting program like Quick Books Pro or Quick Books Simple Start. These programs organize both income and expenses so that preparing income tax returns is less work.
Tax Return Forms
The tax forms you need for a particular business will vary, based upon the way the company is set up (a sole proprietorship, corporation, s corporation, limited liability company or partnership). You can download and print the forms from the IRS website, along with directions for filling them out.
According to the IRS website, people who run a sole proprietorship or limited liability company fill out a 1040 individual tax return along with a Schedule C Form, profit or loss from business. Corporations use form 1120 while S corporations use form 1120-S. Partnership companies use form 1065.
Tax Software Programs
A tax professional can be hired to complete company returns, or you can do the work. Like individual tax prep software, tax services sell do-it-yourself tax prep programs for small businesses. Also available are programs that combines business and personal tax preparation software in one. Purchasing a multi-software package most times is discounted and can be a great deal for small internet businesses on a budget.
Well known companies such as H&R Block and Intuit sell combination home and business software that can be purchased for less than $100. For those who prefer not to download and install anything, Tax Act offers a web-based program that is available on the web without having to install any software.
Tax preparation service done by a pro can cost $500+, so there is a big cost savings to doing the work yourself. However, tax consultants typically have knowledge of particular write-offs which the general public would otherwise miss, and they can certainly save you a lot of time completing forms.
About the Author:
Bob Garrett researches money-saving business strategies for Home Business Center, Inc., a resource for home-based entrepreneurs since 1997. Click below to get access to self employed tax forms, find out what you can write off on the list of tax deductions and see comparisons of low-cost small business tax software.
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