Preparing to file your tax returns doesn’t have to be complicated. According to successful entrepreneur Brian C Jensen, you can learn all you need in five essential steps. So without further ado, here is how to file your tax returns accurately while making the most of the deduction benefits on offer.
Know the forms you need – Brian C Jensen
You will need the correct forms to file the appropriate tax returns for your business. Therefore, identifying the proper documents by your business classification type is of utmost importance.
- If you have a sole proprietorship, you will need to file for a Schedule C Form or a 1099-MISC along with the personal tax returns.
- You will need to use Form 1120 in case you are a C-type corporation.
- If you are an S-type, use form 1120S.
- For partnerships, you will need to use Form 1065 and share all expenses, losses, and income with Schedule K-1.
Arrange a meeting with your bookkeeper
Your accountant is a valuable resource whether you employ an in-house employee or a third-party service. Make sure to meet with your bookkeeper before tax preparation. Keep in mind that your accountant is a specialist in tax matters and can answer many questions for you. Review the previous year’s books to go over any persistent issues. Go through the present books with your specialist to review the entire balance sheet. Preparation will ensure a smoother filing process.
The mileage log factor
If you use a personal vehicle for business, you can deduct the standard mileage rate on your tax return. Most of us deduct the actual vehicle expenses of the year, but the former strategy is beneficial in the long run. The only downside to this is that you need to track your mileage to make the precise deduction regularly. Don’t worry; you don’t need a pen and paper these days; all you need is to download a mileage tracker app on your smartphone. Keep in mind the IRS will require the log. So, ensure the report remains updated.
Arrange all financial records
Here is a list of all the financial records you need before filing your tax returns.
- Income statement
- Balance sheet
- Bank and credit card statements
- Payroll documents
- Last year’s business tax return
- Partnership agreements
- Accounting documents
- Asset purchase details
- Depreciation schedules
- About out of pocket expenses
Even though experts advise you to keep the personal and business accounts separate, you qualify for legitimate deductions on those particular transactions if you have purchased business requirements with your account. Scan your account and add the information to your file. Alternately you can write yourself a cheque from the business account at the end of the year to balance the company book.
Remember, nothing will entirely take away the pain of filing your taxes. With the best tips and expert help, you need to go through the account details, observe, pursue details, and file. However, with the correct information and process, you can guarantee smooth sailing.