Business Tax Help: What You Need to Know (But Were Afraid to Ask)

Business owners need to understand that asking for business tax help is not a sign of weakness. That’s why professionals out there will navigate the complexities of business taxes. You should never be afraid to ask questions or check, double check, and triple check that you are doing things right. 

Understanding business taxes IS complex and certainly can be challenging. Don’t be afraid of this puzzle, though – you don’t have to decipher it alone. At Katherine M. Johnson, CPA, we proudly offer business tax help and services to meet your needs and keep you right on track. In this guide, learn everything you need to know about taxes for your business! 

1. Understanding Different Business Tax Structures

First things first, not every business is the same. For example, an LLC has an entirely different structure than a sole proprietorship. Nonprofit businesses and organizations are even more different. 

Even if you don’t understand the jargon, you should understand how your business structure impacts business taxes. That structure will ultimately determine how you are taxed. Here is a quick overview. 

• Sole Proprietorship: a simple structure and income and losses are just reported on your personal tax return. 

• Partnership: profits and losses are passed through to each partner and reported on their individual tax returns. The split of profit and losses depends on the partnership agreement and ownership interests. 

• Limited Liability Company (LLC): structure protects individuals against debts and some taxes and authorities can tax it in different ways. As a default, most LLCs pass through the taxation to the owners, but it can be taxed like a corporation if preferred. 
• Corporation: corporations are taxed as their own entities and separate from any owners. The corporation itself is responsible for taxes on profits, but shareholders will be taxed on income they receive from the corporation. 

2. Tax Identification Number Registration

Each business is tasked with registering a TIN, or Tax ID Number, for their business. Sole proprietors often operate their business under their personal social security number, rather than assigning a TIN. 

Apart from that, business owners need to apply for the appropriate TIN to do business with. TIN is the overarching explanation of any tax ID number, which includes social security numbers. Businesses that are not operated under an individual SSN will need an EIN, which is an employer identification number. All business operations will take place under that unique ID number. 

3. Be Familiar with Tax Deadlines

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When it comes to business taxes, there are many deadlines to be aware of. You are not always just responsible for filing and paying any taxes due by April 15th. That is certainly an important deadline, but it’s not the only one. 

You can work closely with a CPA to meet these deadlines. For most partnerships and sole proprietorships, you must handle your annual tax filing by April 15th or to file an extension. The additional responsibility you might have is quarterly tax payments. These are estimated tax payments that you pay quarterly all year long to work toward your potential tax burden. 

Most single member LLCs and C corporations also must file by April 15th for their annual filings. However, some corporations, like S-Corps, have an earlier deadline of March 15th. Again, these entities might also have quarterly tax payments to make as well. 

In addition to tax filing, there are withholding taxes to be aware of if you have any employees that are paid through your business. 

4. Stay Organized with Bookkeeping

One of the best things you can do to be prepared for business tax responsibilities is to have a bookkeeping process in place and to stay organized with your process. You can hire bookkeeping services to help with this, but it’s important to have some sort of system and process. 

Whether you use a system like Quickbooks to help maintain and organize records or you use another accounting software, this will be the big step to organize all income and expenses for tax purposes and reporting needs. 

5. Be Familiar with Business Deductions

Businesses typically have various tax deductions they can take advantage of. Business owners can deduct a wide variety of business-related expenses, which often helps reduce their tax burden. 

While you likely have income as a business, you most certainly also have expenses, and this is where you balance the two out. These are some examples of business deductions: 

• Office supplies and equipment
• Home office deductions (if you work from home)
• Travel and meals
• Marketing and advertising
• Employee salaries or benefits

These are just a few of the most common deductions, but there are more available to businesses and it’s important to track and be aware in order to take advantage of these.

6. Sales Tax Tracking

If your business has products or services that have sales tax applied to them, you need to be familiar with these requirements. Sales tax requirements can vary depending on where you are located and the nature of your business. There are states that have statewide sales taxes, and there are locations that have local taxes. 

As a business owner, it is your responsibility to know and understand required taxes for your location. It is also your responsibility to enforce and report sales tax. You will have to remit to your state the applicable sales tax based on your sales and sales tax collected from clients. Follow the state’s deadlines to ensure you don’t get any hefty fines. 

Get Business Tax Help from Katherine M. Johnson, CPA

Taxes for businesses are a lot to take in, and there are some complex rules and details that can be challenging to understand and follow. At Katherine M. Johnson, CPA, we help you stay on top of deadlines, keep accurate records, and be compliant with your business tax practices. 

Contact us today, and let’s work together for your business tax needs.