The Seven Keys To Successful Corporate Tax Preparation
Many individuals look to April 15 every year with dread
. For small and large corporations, it's not any different. No matter what type of taxes you're filing, there are many ways to make the process easier. Here are seven keys to success with corporate tax preparation.
Know Your Deductions
Businesses can deduct all "ordinary and necessary" business expenses. In order to take advantage of these write-offs, make sure to keep track of all your business expenses. These expenses can include business travel, equipment purchase, salaries, and rent. When considering travel expenses, remember mileage expenses as well.
Pay Quarterly Estimate Taxes
For new or small businesses, forgetting to pay quarterly estimated taxes can really trip you up. It can cause cash flow problems and sometimes result in fines or penalties from the IRS. Use your accountant or the information on the IRS website to help estimate your taxes, and make payments every quarter.
Remember Other Tax Deadlines
For individuals, April 15 is the big day. You may choose to file an extension if you feel you're going to be later than April 15. For businesses and corporations, there are other deadlines to keep in mind.
* Most annual returns are due April 15 for S corporations.
* For C corporations, annual corporate returns must be filed within 2.5 months after the close of their fiscal year.
* Estimated taxes are due quarterly every year on April 15, June 15, September 15 and January 15.
* Depending on the size of your payroll, employee taxes are due weekly, monthly or quarterly.
Keeping these deadlines on a calendar and allowing plenty of time to prepare will make preparing annual taxes much easier. Ask your accountant to recommend software or other ideas that will make preparation simpler.
Remember Charitable Contributions
Many businesses make charitable contributions in their own name, or in the name of their employees. To receive the maximum tax benefits, make sure you follow all rules set forth by the IRS closely. The organizations you contribute to must be listed by the IRS as deductible. Remember that any contribution of over $250 requires a letter of receipt from the receiving organization.
Ensure Employee Taxes are Correct
Many corporations will have employees other than the person running the business. With every paycheck, a variety of taxes must be withheld from employees. Each payday, look closely to ensure that amounts for Social Security (FICA), Medicare, and state and federal income taxes are correct. Make sure that the amount you match for FICA and Medicare taxes is correct. Also remember to keep up to date with federal and state unemployment taxes. By checking amounts and payments on a regular basis, you'll ensure that no problems arise come time to file quarterly and annual taxes.
Know Sales Tax Guidelines
If your corporation is selling a taxable product, it's important to stay up to date with sales taxes. Know the guidelines for each individual state in which you do business. If you do not have a physical presence in another state, but sell merchandise by internet or catalog, you may be subject to that state's "use tax."
Know the guidelines for each state whether you have a presence there or not. Making sure that registrations in each state are up to date and that state tax returns are filed online is important. By doing this, you'll avoid any penalties and make sure things run smoothly when filing annual taxes with the IRS.
Hire an Expert
As a business, the best way to make sure that taxes go smoothly is to hire an expert. For smaller corporations, it may be enough to hire someone on a quarterly or yearly basis. For large corporations, having one or more tax accountants on staff may be the way to go. Hiring someone who is trained in preparing corporate taxes will allow you to relax. You know that they have the knowledge to save you money, plan for next year, reduce liability and maximize your tax refund.
The key to successful income tax preparation for your business is planning ahead. Remember that even though "tax time" only comes once a year, businesses need to keep on top of deductions and recording throughout the year. Ask your accountant how to simplify your corporate tax preparation methods.
by: Eugene Cohen, CPA
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