WHY YOU'RE READING THIS
Filing business taxes in a timely manner is an essential part of running your business especially if you want to avoid unnecessary fees, interest, and penalties. In this guide, we will discuss the basic things small business owners need to know for filing business taxes in 2021.
Filing Business Tax Extensions In 2021
If you can complete your taxes and submit them to the IRS by their due date, there is no need to file an extension.
If you want to file for a business tax extension beyond their due date you will need to fill out an extension form and send it to the IRS. If you still need to file an extension, the form varies based on the type of business you have. For example, if you are a sole proprietor filing a schedule C then you will send in the 4868 form. On the other hand, if you are a corporation then you will need to fill out and send in the 7004 form. Keep in mind that an extension of time to file your tax return is not an extension of the time you have to pay (if you owe taxes).
Checklist for Filing Business Taxes
When preparing to file your business taxes, the following checklist will help you make sure you have everything you need so you can save time.
EIDL Grant or Paycheck Protection Program (PPP) Loan
For 2021, if you received an EIDL grant or Paycheck Protection Program (PPP) loan, make sure to let your tax preparer know the amounts received and if your PPP loan was forgiven during the year. The grant and loan forgiveness are tax exempt, but they make require additional disclosure on the part of your preparer.
The $75 Receipt Rule
Generally, you don’t need receipts for items under $75, unless it is a lodging expense (who has a lodging expense for less than $75?!)See the full details for the $75 rule in Publication 463 →
Self-Prepare Using an E-file Software
In order to self-prepare your businesses’ taxes, you’ll need to first start by choosing a software that works best for you. A listing of well-known tax software and a brief description of their differences from one another can be found here. One of the benefits of self-preparing is that in general it will cost less than using an accountant. However, a potential drawback of self-preparing is that you will likely invest more of your time in preparing your taxes than using an accountant. Similar to using an accountant, you’ll want to have a copy of your prior year tax return, balance sheet, profit and loss statement, listing of business miles driven and home office information ready when you begin your taxes. The tax software will help you prepare your taxes using various input and questions screens. As part of this process, you’ll likely need to find additional documents as the software prompts you for more information.
In order to use an accountant you’ll first need to find one. One of the most common ways that people find their tax preparers is through a referral from a friend or business associate. A good place to start when looking for an accountant is with other business owners you know, bankers, attorneys, or financial advisors. When selecting your accountant, you’ll likely want to start with a consultation and interview the accountant to make sure you feel that you will work well with them. As part of this process, you’ll want to get a listing of the information that they would need to prepare your tax return and their timing and process for filing the return. This may vary depending upon your individual circumstances so make sure to show them a copy of your last year’s tax return and any changes that may have happened. If you are new in business, they will likely have some additional requests to determine what tax filing will be needed.
Streamline Tax Time with PaySimple
Business taxes can be stressful, but with the right team and the right business tools they don’t have to be. If tax time has you stressed and scrabbling because you’re manually uploading business transactions into your accounting system then you may benefit from PaySimple. As a payment gateway software, we are dedicated to making it easy for business owners to manage their cash flow. Our Integration with QuickBooks Online takes that mission a step further. Experience a smoother, error-free tax time with PaySimple and Quickbooks Online. Get started today and reap the benefits before filing time.