Tax Day 2023: Get Our Tax Preparation Checklist
April 18, 2023, also known as Tax Day, is the last day to file taxes. Though businesses have some varying tax deadlines from individual taxes, it is important to be as prepared as possible .
Tax preparation can be tedious, but there’s nothing worse than being underprepared or incurring hefty penalties and fines. Your first question might be, “What documents do I need for taxes?” And though that answer may vary, here is your tax documents checklist:
- Financial Statement: This typically includes cash flow statements, a balance sheet, and an income statement, which provides a high-level overview of your business’s financial operations.
- Capital Asset(s): An asset(s) that benefits your business, such as land, equipment, or vehicles, which is used to determine the impact to your company’s bottom line.
- Vehicle Use Records: If using a personal vehicle for business purposes, you can write off some of your vehicle operating expenses as a tax deduction.
- Home Office Expenses: Like a personal vehicle, if you use a portion of your house exclusively for business or meet regularly with clients in your home office, some home office expenses can be written off as a tax deduction.
- Mortgage Interest and Property Taxes: In-line with the home office expenses, you can also make deductions from your mortgage interest and property taxes.
Depending on what type of business you own, generally, there are five types of business taxes:
- Employment Taxes: these taxes include W-2 forms (i.e. wages, tips, and other compensation paid to each employee), federal income tax, Social Security, Medicare, federal unemployment (FUTA), and state unemployment (SUTA) (if applicable) taxes.
- Income Tax: Income tax is the government imposed tax on income produced by businesses. It is typically used to support public services, government initiatives, and local communities. It is important for businesses and individuals alike to remain up to date on any changes, such as the impact of Form W-4 on federal income tax calculations.
- Self-employment Taxes: This tax is applicable to individuals who run their own businesses and consists of Social Security and Medicare taxes.
- Estimated Taxes: Estimated taxes are typically payments made to the IRS throughout the year when salary or pension is not enough, or if an individual receives income from interest, dividends, alimony, self-employment income, capital gains, prizes, or awards. According to the IRS, sole proprietors, partners, and S corporations typically expect to make estimated tax payments if they predict owing $1,000 or more in taxes.
- Excise Taxes: Excise taxes are applied to various goods, services, and activities, which depending on the excise tax, can place liability on manufacturers, retailers, or consumers.
Checklist for Tax Preparation
Additionally, it is important to remember the following items:
- Remembering important tax deadlines. Business tax deadlines can vary from personal tax deadlines, and organizations tend to have more important ones than individuals. Some of the deadlines include previous year’s quarterly estimated tax payments, W-2 forms and 1099 forms for any employees or independent contractors hired the previous year, contributions to retirement savings plans, and filing extensions. The Internal Revenue Service (IRS) also creates yearly tax calendars to highlight important tax deadlines for different types of businesses.
- Filing tax returns. The fastest and most accurate way to file taxes is electronically. If you find you need more time to file taxes, you are able to request an extension—partnerships, S corps, and C corps can use IRS Form 7004 and sole proprietors can use IRS Form 4868. Though the IRS usually grants a six-month extension to those who request one, it is important to note that extensions do not extend the timing of the payment on your taxes. You will need to estimate tax payments and provide the funds by the tax filing deadline regardless of extension.
- Ensuring data privacy. Tax season is also a prime time for identity theft scams. Employers need to remain diligent in protecting employees’ data. Though the IRS has progressively improved identity verification and protections of data privacy, organizations should focus on amping up cybersecurity training and brush up on recordkeeping laws. Stay proactive on recent scams to better inform your employees and protect employee data during tax season.
- Other considerations. If you are impacted by a natural disaster, the IRS often postpones tax deadlines for those in a federally declared disaster area. For example, the IRS postponed tax filing and tax payment deadlines for those impacted by the September 2020 California wildfires.
While mistakes can happen, especially if you are rushing to file your taxes, partnering with an HR tech company can simplify the process for you. Namely offers valuable payroll tech that can help you manage tax-related issues, such as tax calculations and updates, electronic state and federal W-4 forms, mobile 1099 forms and W-2 forms, and reporting (i.e. quarterly and year-end reports). Learn more about Namely’s payroll solutions today.
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