Tax planning, preparation, and processing all require expert opinions and professional insights. Any tax-related tasks have to be dealt with thoroughness, caution, accuracy, and consistency. The taxpayer or the tax accountant must be keen on details, knowledgeable with the processes, and updated with current rules and regulations.
Just the idea of “taxes” overwhelms taxpayers, individuals, and corporations alike. They tend to hate all things relating to taxes, as these could get either complicated or tedious with all the forms and numbers involved. Also, the processes needed to finalize taxes could undoubtedly be tedious and time-consuming. Then, the risks and threats of legal ramifications add pressure to the already overwhelming world of taxation.
Business Taxation and Accounting Services
Tax preparation is dreaded by many due to the many phases it entails. It involves several tasks that may seem small but have huge impacts. Moreover, this is the tax accounting stage that has to deal with most of the paperwork, including data gathering, data classification, and data analysis.
Gathering All Relevant Documents
Phase one of tax preparation involves gathering all relevant files, statements, reports, and records. The collated raw data must be complete and correct as the rest of the processes will greatly rely on these. These documents might include bank and credit card statements, invoices of purchases and expenses, asset disposition records, financial statements, agreements and contracts, payroll reports, and sales receipts.
Browsing Through Last Year’s Data
If this is not your first fiscal year to file business taxes, looking back at your last year’s filed documents could be used as a basis for this year’s tax season reporting. You could copy corresponding details such as tax ID number, business code number, activity descriptions, shareholder information, and a lot more for faster and smoother processing. Last year’s data could also be used as a comparison tool or benchmark for business planning for the current and incoming years.
File as C Corp. or S Corp.
Once you have all the details you need, you will need to decide how you want to file your taxes. Business corporations are automatically set as C Corporations for tax purposes. You have the option to file as S Corporation, but you need to meet certain requirements first. To be qualified, you must be operating as a domestic corporation with 100 or fewer shareholders who must not be non-resident aliens, corporations, or partnerships. By choosing to be taxed as S Corp., you are more likely to avoid double taxation.
Settling Estimated Taxes
Businesses must settle an estimated amount of tax liabilities every quarter. This is why previous tax statements and current financial reports are essential. You could use the data from these records to have a wise estimate of how much taxes you owe. Any delays miss, or inaccuracies could result in interests and penalties.
Federal and State Tax Return Filing
Then, during the actual tax season, you have to accomplish and file tax return forms to balance the taxes you have already paid and the amount you owe. This would depend on how you filed your taxes – C Corp. or S Corp.
Taxes could get really complicated, so it is best to leave such matters in professionals’ hands. Please do not risk your business to possible legal ramifications; instead, protect it by availing taxation and accounting services from reliable and trustworthy virtual firms.