With tax preparation season upon us, we share some guidance on preparing your taxes accurately and on time.
By Team Roll on March 11, 2023
4 min readIt’s that time again: tax-season preparation. Small businesses across the country are getting ready for the coming months, gathering 1040s, 1099s and W2s for themselves and their employees.
Small business taxes are far from straightforward. Employers have several types of taxes to pay throughout the year. Tax planning enables you to mitigate your taxable income, take advantage of tax incentives, and avoid missing crucial deadlines.
Consult a professional from ADP to figure out how to file taxes for a small business and simplify your tax responsibilities.
Income tax will make up the majority of your tax burden. All businesses must pay federal taxes on their income during the year. Partnerships must file an annual information return, but they’re not liable for federal income taxes. Members of a partnership pay their taxes through their personal tax returns.
States also levy income taxes on small businesses, but state rates and filing mechanisms differ.
Employers also need to pay self-employment taxes. These taxes are comprised of Medicare and Social Security taxes.
The current self-employment tax rate is 15.3%, 12.4% for Social Security, and 2.9% for Medicare. Tax rates are so high because, as a self-employed person, you’re responsible for paying the employer and employee share of these social taxes through your business tax return.
Part of determining how to file taxes for a small business involves paying employment taxes. If you have any employees, you need to pay additional taxes, such as:
Businesses manufacturing or selling certain products may be eligible to pay excise taxes. You could be eligible for excise taxes if you have certain facilities or use specific types of equipment.
Each state independently determines what type of property is taxable. Some states will tax you based on any commercial real estate you hold. Others may levy property tax on computer equipment, company vehicles, and various business assets.
States can also tax sales of goods or services. If you’re located in one of these states, you’ll likely need to register for sales and use taxes manually.
Common exemptions to these taxes include food, clothing, newspapers, utilities, and medicine sales.
The IRS requires you to pay estimated taxes on income that isn’t subject to withholding or if the amount of tax being withheld doesn’t cover the amount you’re expected to owe.
Estimated taxes can cause confusion in small business tax preparation, so make sure you find out how much you need to pay on your account well before tax filing season.
Here’s how to get your taxes in order this year.
In order to make sure you report taxes accurately, gather all your records in advance. You’ll need a copy of all your income and expenses, as well as information on how you’ve paid yourself and your people.
Roll will do all this for you, right in the app. If you’re working manually, you’ll need to make a few calculations.
A small business filing taxes for the first time online can find themselves wondering what they need to register for and which forms they need to file. Online tax filing for a small business is relatively straightforward, but you may need to file additional forms.
The form you file with the IRS will depend on the kind of business you’ve set up. Many small businesses are registered as sole proprietors or LLCs, so they can file their business taxes as an addition to their personal taxes.
That form is known as Schedule C.
If you're operating as a corporation, you’ll need to prepare a separate corporate tax return. That’s done with Form 1120.
Some of the other common forms you’ll find include:
These are examples of the primary forms you’ll be filing as part of your returns. Depending on what you do, you may have to submit some other niche forms throughout the year.
If you’re registered as a sole proprietor or LLC, tax filing is actually pretty easy. Schedule C is only two pages long, and it lists all the possible expenses you claim against your income.
Simply subtract your expenses from your income and you’ll arrive at your net profit or loss. You can then enter that number on your personal income tax form.
If you’ve registered as a corporation, Form 1120 is a little more complicated. See the instructions for the form from the IRS for more guidance.
There’s no single deadline for filing your returns as a small business. Miss any of your deadlines without good reason, and you could be hit with IRS penalties and lose out on your refund.
Here’s a brief overview of the most important tax filing deadlines for small businesses:
Your quarterly tax filing deadlines are:
For next year's taxes, consider Roll. If you sign up now, you’ll not only get to run payroll in under a minute: Roll offers full-service tax filing as well, gathering the information you need to file your taxes in 2024. W2s and other forms are done and processed digitally without needing to go to a bank or a physical location.
There are many other options for filing your taxes, of course, including a range of paid software that will submit electronically on your behalf.
You can of course go the paper route, completing your taxes after printing out the forms and mailing them to the IRS.
How much does a small business have to make to file taxes?
If your net earnings from self-employment were $400 or more, you need to know how to file taxes for a small business.
How do I file my business taxes for the first time?
Use a professional tax filer if you are wondering how to file taxes for a small business. You can also get help with payroll from ADP’s mobile service for small business taxes made easy.
What happens if I miss the deadline?
You could be hit by financial penalties for every offense if you missed the deadline without filing an extension. Make sure you plan to file in advance with the help of ADP’s industry-leading HR, payroll, and small business tax service.
If you have any questions when running your yearly reports or payroll, as a Roll by ADP customer - you have access to 24/7 Live Chat Support to help you every step of the way.
If you haven’t tried Roll yet, get a free trial and be on your way to a less stressful tax season next year!