Starting a business is thrilling, sure, but it comes along with its own set of mind-numbing responsibilities, including tax filing. Tax filing for startups requires extra attention, which in itself is trouble for a young business trying to create their mark among the existing businesses.
While we are not solving your problems, we are here with some tips that will certainly help you while filing taxes for your businesses. Here are five things you must keep in mind while filing your taxes as a startup owner-
- Remember the important deadlines – Deadlines are extremely important when it comes to tax filing because that determines what and how much you need to pay. The later you file, the more you pay. Some important dates to keep in mind include January 31 (Employers filing & issue form W-2, W-3, Form 1099 MISC, Form 1099-NEC), March 15 (Deadline for partnerships, LLC, and S Corporations), April 18 (C Corporation, single person LLC, multi-person LLC, and sole proprietorship), May 16 (NPO). However, there are more dates to keep in mind, and also ensure you request for extension on time. You can find more updates and information on this on www.irs.gov.
- Deductible Startup cost – While filing your cost and expenses, remember that your startup costs are deductible. It means, your market research and analysis, scouting, training staff, legal fees, establishing vendors and supplies, and more all come under capital costs as investment for long-term assets in setting up your business. Do keep in mind that like all assets, these are also liable for depreciation so you must maintain a consistent depreciation method for all such assets, depending on the type of asset.
You can also amortize some costs, like your organizational expenses. Such costs can also be entirely deducted in the first year of your startup. You can get a more detailed list of deductible costs here.
- Map the right forms – As much as tax deduction is important, it’s also important for you to remember to fill out the right forms. Mapping the right ones will require work, and some attention. Keep track of forms like:-
- Schedule C
- 1099 MISC
- Form 1120
- Form 1120S
- Form 1065
- Form 990 or Form 990-PF
- Form 8832
- Maintain all your expenses – Recording your expenses is your proof for the deductions made. If you do not maintain your expenses, it’s going to be difficult to prove the deductions, which might put you in trouble. Here are some expenses to must record for which the IRS may let you go off of tax hooks:-
- Home Office
- Office Supplies
- Home Internet
- Cell Phone
- Payroll Expenses
- Business Insurance
- Keep a clean financial record system – Just ensure your balances tally and there are no loopholes that can be pointed out against your business. Avoid any shady monetary activity that could land you in trouble during tax filing. It’s always helpful to be extra cautious and careful about the money spent, given, or received from/to any sources. Make sure you have not missed out any essential information from your financial statements, and you are good to go!
Hope this helps, and if there is any other informational and service help you need while filing your taxes, do not hesitate in reaching out to us for the best financial advice, services, and at costs that benefit both of us.