The dates for filing federal taxes depend on two factors – the structure of the business and the financial year that the business follows, whether it is the fiscal year or calendar year, explains Brian C Jensen. However, knowing the date is critical because no business owner would dare to defy the deadline for filing taxes because of the high penalties they would face.
Filing taxes is no easy job because it requires knowledge about the latest tax laws. But one must know the techniques of filing an accurate return. By availing of the credits and deductions that keep the taxes low. Having heard about the trials and tribulations that entrepreneurs face in filing taxes. First-time business owners might become quite tense about what awaits them. As they prepare to file taxes within the due date declared by IRS.
Advice for sole proprietors from Brian C Jensen
The obligations of sole proprietors in filing taxes are pretty clear from the IRS directives. That stipulates the documents to be filed with the return. They must submit Schedule C along with Form 1040 every year. Schedule C pertains to Profit and Loss from business Form 1040 is for US Individual Income Tax Return. Along with Form 1040, you must file a Self Employment Tax form (Schedule E). April 15 is the tax filing date for those who for the calendar year and the 15th day of the fourth month after the end of the fiscal year is the time for filing taxes. Paying estimated taxes is necessary if you expect that your tax liability is likely to exceed $1000.
Partnerships and LLCs
The due dates for Partnerships and LLC firms are the same as proprietorship firms. Such companies must file Form 1065 about US Return of Partnership Income to report income and loss to the IRS. They must submit copies of the Partner’s share of income, credits, deductions covered by Form K-1. Which is part of Form 1065, to the partners and LLC members by the filing date for Form 1065.
Form 1120, known as US Corporation Income Tax Return, is applicable for regular Corporations. 1 March 15 is the due date for those who follow the calendar year. And corporations that follow the fiscal year must file the return. Within the first fortnight of the third month from the end of the fiscal year.
Form1120S is applicable for S Corporations, and like partnerships. The shareholders must receive a copy of K-1, which is part of Form 1120S. S Corporations must follow the due dates as mentioned above for Corporations.
The IRS allows deductions for the operating costs of businesses only if these are ordinary and necessary. Expenses commonly accepted in the field of business are termed as ‘ordinary’. Expenses that are helpful for your business are ‘necessary expenses’. Deductions are available for business expenses that include employee benefit programs. Advertising, utility cost, rent, employee wages, office supplies, and membership of professional organizations. As well as subscriptions of business publications.
Equipment purchases and auto expenses for cars used for business purposes also qualify for deductions.