Tax season can be daunting for the average American, but if you own a small business, you may find it downright overwhelming. While tending to all the day-to-day responsibilities that come with running a company, it’s challenging to keep up with the ever-changing and complex tax laws. Regardless, filing your business tax return is necessary if you want your operations to survive and thrive. Thus, it’s important to educate yourself about business taxes and properly prepare for this time of year. Below is some clarification on a few topics that every entrepreneur should understand.

Common Questions Concerning Small Business Tax Returns 

Do I have to file taxes even if I don’t owe any money? 

Every company is required to file a business tax return. This is the case whether you generated income, your books are showing a loss, or your business was inactive. Failing to file can result in hefty fines and penalties assigned by the IRS. Reporting a business loss can also help reduce the total income you show on your personal tax return.

What information do I need to prepare my business tax return?

Before you can prepare your business tax return, you will need a profit and loss income statement and records for deductions. The statement will provide a list of all the sources your operations generated income from and all of its expenses. If your company makes or sells a product, you will also need to have a cost of goods sold calculation.

What are deductible business expenses?

The IRS allows business owners to deduct some expenses related to operating the company. The more deductions you can take, the lower your taxable profit will be. If they apply to your situation, some of the biggest deductions to look into include auto expenses, advertising, office supplies and equipment, fees paid for lawyers, tax services, business consulting, insurance premiums, travel, and charitable contributions. 

How can I simplify the tax filing process?

You can alleviate much of the stress of tax season by planning throughout the year. Keep detailed expense reports and organized receipts, keep your business and personal funds separate, set money aside for estimated tax payments, and meet with an accountant regularly to review where your finances stand.

If you are looking for a reputable accountant to help prepare your business tax returns, contact Cloyd & Associates, PSC. Their team of financial experts has been working with entrepreneurs across Laurel County, KY, for years. They will ensure your filing is accurate to avoid getting audited, and they will execute the best strategies for minimizing your tax burden and maximizing your savings. Call (606) 864-8110 to schedule an appointment, and visit them online for more information on the various tax services they offer.