How does a small business owner do their taxes?

Posted on November 25, 2011 by

Question by Mandy: How does a small business owner do their taxes?
Employees get their W2 forms in the mail in January, but how do small business owners take care of that sort of thing? What should I know before the end of the year?

(I have an at-home business and this is my first year.)

Best answer:

Add your own answer in the comments!

This entry was posted in Small Business Taxes and tagged , , , , . Bookmark the permalink.

One Response to How does a small business owner do their taxes?

  1. Bills.com says:
    November 25, 2011 at 11:44 am

    Small Business owners have some requirements that individual tax payers don’t have. Typically, businesses are required to file and pay quarterly or monthly estimated taxes to the federal (and state in some cases) government. If you are willing to invest a little time reading, the IRS has some great small business resources available at (http://www.irs.gov/businesses/small/).

    Essentially, the first step involves applying for an EIN (employer ID number) and determining whether your business is actually a business or a hobby (as defined by the IRS). Record keeping, defining your business structure and educating yourself on the specifics of your industry are important pieces in preparing to file your taxes. Most small business owner’s mistakes come from a lack of record keeping and planning. If you accurately account for your time, the cost of goods you are selling and the resources you are allocating to the business, you will have a good footing from which to prepare and file your taxes.

    If your business is successful enough and has enough profit to hire a book keeper or tax preparer, you can avoid many of the pitfalls that come with operating a small business and will also allow you the time to focus on running and growing your business instead of trying to balance everything on your shoulders. Otherwise, there are some great programs from Quicken and Turbo Tax (among others) that have some very helpful tools to manage the day to day book keeping for your business at very reasonable prices. Some of them even have tax preparation services included or available so it becomes a one stop shop for your small business accounting needs.

    Good luck with your new venture and I hope that the information I have provided helps you Find. Learn. Save.

    Best,
    Bill
    http://www.bills.com/blog/