It’s hard to believe that another year has gone by and we’re on to a new one! Before you know it, the deadline to file your business’ taxes will arrive. Not sure where to start? Follow these tips to make your tax season smooth sailing.
Give Yourself Time
While it’s tempting to push off filing your taxes, start now so you’re not in a rush. “I always recommend setting aside time each week dedicated to taxes. Though the filing deadline may still be a few months away, it’s never too early to help your business prepare for it,” says Tony Pica, Vice President of Business Solutions at Navy Federal Credit Union. Be sure to take into account that you’ll need time to not only file your taxes, but also gather the documentation.
Before you begin filling out any tax forms, collect all your records so you can have them in front of you when reporting your business earnings and expenses. “Having accurate records will ensure your tax return is correct and that you’re not leaving deductions on the table,” recommends Pica. You’ll need your taxpayer identification number (TIN) and financial records for the year. Having your records on hand can help you determine what tax forms are right for your business.
Find the Right Form
The way you operate your business will determine the right income tax form to use. “It’s really important to have your business properly classified, because not doing so could result in overpaying taxes,” cautions Pica. For example, business owners who use a sole proprietorship report their business income and expenses on a Schedule C attachment to their personal income tax. If your business isn’t a sole proprietorship, here are the forms you may need, depending on your business’ structure:
- Partnerships file using Form 1065.
- Corporations file using Form 1120. If your business is structured as an S Corp, use Form 1120-S.
- Limited liability companies (LLCs) use different forms to file based on how the business is taxed.
Pay Attention to Deadlines
Now that you’ve done all the hard work, make sure you’re aware of the different filing deadlines. Some years, the deadline may fall on a weekend or holiday. If it does, then the deadline is the following business day. This tax season, mark your calendars for these dates:
- March 16, 2020: Calendar year partnerships and multi-member LLCs must file Form 1065 with the IRS and distribute Schedule K-1s to partners by March 16. Calendar year S corporations also must file Form 1120-S by this date.
- April 15, 2020: Sole proprietorships and single-member LLCs must submit Schedule C with owner’s personal tax return and file by this date. Many corporations also must file Form 1120 by this date.
At Navy Federal Credit Union, we want your business to thrive. Learn more tips for managing and growing your business on Navy Federal’s Business Solutions page.