Small Business Owners: Know These 5 Tax Facts?
May 29 2017
Filing taxes is never an easy ordeal for small business owners. From timely applications to deductions and refunds, there are so many details and intricacies involved with tax filing. However, there are ways to secure help during the turbulent tax season. This includes tax consolidation, along with vital tips on consolidating any outstanding tax debts.
Small Business Owners: Know These 5 Tax Facts
With years of extensive industry experience, Edge Financial continues to help clients dealing with tax problems and issues. In fact, here are some essential tax facts that you may not know:
- Estimated Taxes: As a self-employed or small-business owner, you need to make quarterly estimated tax payments.
- Schedule C or C-EZ: Self-employed taxpayers must file a “Schedule C – Profit or Loss from Business” or “Schedule C-EZ Net Profit from Business” with their 1040 Forms.
- Self-Employment (SE) Taxes: For small-business owners earning profits, self-employment and income taxes still need to paid. This includes social security and Medicare taxes.
- Applicable Deductions: Taxpayers can deduct any and all expenses paid to run their businesses.
- Timely Deductions: In most cases and scenarios, taxpayers are allowed to deduct expenses in the year paid — or the year incurred.
All taxpayers should also keep copies of their tax returns. As of January 2017, taxpayers using software products — for the first time — may need to adjust their Adjusted Gross Income (AGI) amounts from prior-year tax returns. This is done to verify their identities, as well as electronically sign and validate tax returns. Here are some benefits of the tax facts mentioned above:
Estimated Taxes
Making estimated tax payments throughout the year helps your cash flow. It also helps avoid one lump sum payment at the end of the year, as well as IRS underpayment penalties.
C or C-EZ
Use C-EZ if you earned less than $5,000 in profits. All forms have user-friendly instructions.
SE Taxes
Medicare and social security taxes will be assessed now or later. It’s better to pay these taxes — even if you are earning profits — to avoid future IRS hassles.
Deductions
You can deduct ordinary or necessary expenses for your business. Ordinary expenses are common and accepted in all industries. Necessary expenses, however, are expenditures that helped your business proper and grow.
When to Deduct
Deducting expenses within the year paid or incurred is recommended. This allows you to tap into a higher return, while ensuring capitalization on some costs over the years.
Success for Small Business Owners
These tax facts can truly help you save time, money and file your returns hassle-free. For more information on Edge Financial, simply visit their website or contact them today for a tax consultation.
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