1. Prior Year’s Return. If you’ve previously used an accountant for your business taxes and are continuing their services, they should already have your last tax return on file. However, if you are completing your tax returns on your own, or using a new accountant, you should locate last year’s return. Having it on hand will help you verify important information such as your federal tax ID number, business code number, date of incorporation, and the method your business uses to track finances.
2. Identifying Information. The type of identifying information needed to file your business taxes will depend on how your business is structured. In many cases, you will need to provide personal information such as your full name, Social Security Number, and birthdate. You may also need to provide this information for your spouse and dependents, if applicable. If your business has an employer identification number, or EIN, you will need to provide this on your business tax return as well.
3. Financial Statements. You will need copies of your business financial statements for the filing year. In some cases, you may need financial statements for one or more previous years as well. These financial statements include your balance sheet, cash flow statement, and income statement. Depending on how your business is structured, and how you pay yourself, you may have been issued a W-2 form as well. Likewise, you may have received a 1099 form if you did contract work for another business. If so, you will need these forms when filing your business taxes.
4. Capital Asset Activity. If your business has any capital assets such as land, equipment, buildings, vehicles, investments, or intellectual property, you will need to report any gains or losses you had from selling or trading them. You will typically need to document each capital asset transaction, including the acquisition and sales dates and purchase and sales prices.
5. Financing Information. Gather information regarding your business financing. This should include any loans or grants that you received or made payments toward during the filing year. You should collect any loan statements, interest statements, or grant agreements pertaining to your business funding.
6. Expenses. Ensure you have records of your business expenses for the year. These can include receipts, bills, bank statements, invoices, payroll records, W-2s issued to your employees, and 1099s issued to non-employees. Be sure to account for all expenses, including office expenses, business-related mileage costs, travel expenses, employee health insurance costs, charitable donations, and education expenses. Having a record of your business expenses can help you or your accountant determine which tax deductions and credits your business may be eligible for.
While tax time can be overwhelming for many business owners, you can make the process more manageable by taking the time to review and gather your essential tax documents. If you feel in over your head, or are confused about how to file your business taxes, you should consider hiring a professional accountant or business tax preparer. But as is the case when hiring any kind of business consultant, be sure to do your homework to ensure you end up with a reputable, trusted professional. At BankFive, we know the unique challenges that small businesses face, and we are dedicated to helping them with their financing, cash flow, and business management needs. If you are a small business owner in MA or RI who is seeking a true banking partner, don’t hesitate to contact us today.