Tax season.
Small business owners can fall
into the trap of thinking the IRS has
bigger fish to fry.
It's not true.
The IRS fries all sizes of fish.
Doing your taxes correctly is key
to keeping your business afloat.
In this video, we're covering the basics
but check out our full article below.
And don't forget to hit like and
subscribe to see the rest of our series,
"Ready, Set, Goals."
There are five key steps when
it comes to doing your taxes for your
small business.
Your business is unique, like a
thumbprint, or a handlebar mustache.
Every type of business does taxes
a little differently, so let's start by
choosing a legal structure and
that just means deciding what type
of business you are.
There are four types of legal structures.
If you're operating an unincorporated
business and are the only owner, then
you're automatically a sole proprietor.
Flying solo.
Since it's just you, taxes on sole
proprietorships are easy.
Just report business income and
losses on your own personal tax return.
You can also take advantage of a new
tax law allowing sole proprietors a
20% tax deduction.
Cha-Ching!
S corporations are a little different.
If you think you need help remembering
just think S stands for shareholders.
In an S corporation, income is passed
directly to up to 100 shareholders.
Normally income passed to
shareholders can get double taxed:
taxed once at the corporate level and
once again at the personal level of the
shareholders, but not as an S corporation.
Moving on to C corporations.
C stands for cool.
Why does it stand for cool?
Because it's timeless.
Some of the biggest and longest standing
companies are C corporations.
So traditional structure of
shareholders, a board of governors,
officers, directors, and employees,
while not the most common choice for
a small business, it shows potential
investors you're thinking ahead.
And it paves the way for our
favorite thing in the entire world...
growth.
Last but not least a good old LLC.
There are two reasons an LLC is the most
flexible structure for small businesses.
One, you don't have to worry
about the dreaded double taxation.
And two, you can make tax deductions
for business losses.
Yep.
If your business loses money, you
pay less taxes.
Now, different LLCs get taxed
differently.
To keep us from drowning in
information we're going to just
keep swimming.
Check out that article if you're
thirsty for more LLC knowledge.
If you need help picking the right
payment structure, check out this video.
Next up, using tax deductions to
lower your bill.
Vehicle expenses, wages, business
travel, supplies, equipment, any
operational expense you can think of can
be written off as a business expense
come tax season.
And the deductions don't stop there.
If you're a new business, you
can write off way more than
operational expenses.
Any cost in getting your business started
can be written off: insurance, office
space, even new business cards.
Now it's time to pay up your
quarterly taxes.
If you're an S corporation
shareholder, sole provider, or partner,
you need to pay taxes every quarter.
And you can figure out how much to pay
using a handy-dandy form 1040-ES.
Lastly, you need to pay business taxes.
Keeping track of all the different types
of business taxes is important in showing
the IRS nothing fishy is going on.
Payroll tax is the tax you pay on your
employees wages.
Excise taxes are usually included
in the price of your product.
Certain products like gas, alcohol,
and tobacco have special excise taxes.
Sales tax differs by state.
This is a tax paid by consumers that
you are responsible for collecting.
And property tax is any tax on commercial
real estate if that's your thing.
That should do it.
If you have questions,
consider talking to a live expert.
Tax season, the most wonderful
time of the year.
Download our full article for more
details on paying taxes as a small
business owner.