An S Corporation and a sole proprietorship, for example, would not pay their business taxes in the exact same manner. There are different ways to tax certain entity formations, like LLCs and S Corporations. A startup’s entity ultimately determines what kinds of taxes must be filed. Huh? Why does this matter? Your business entity - whether you form a limited liability company (LLC), corporation, partnership, or sole proprietorship - affects everything about the way you pay taxes. Ask yourself which entity your small business incorporated as.
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The biggest pro tip of all? Consult with an accountant if you have pressing concerns on tax matters. Here are some of my tips for how business owners can best prep for tax season.
I often witness the anxiety tax season brings small business owners who are hunting for receipts at the last minute or trying to remember if they mailed W-2 forms out to employees. While I’m not an accountant, I’ve assisted thousands of startups in forming corporations or LLCs. The good news, however, is that while there were a few changes made in the 2019 tax code, those were largely related to individual deductions, not businesses. Some taxpayers may still feel the impact of the tax reform while filing their 2019 taxes. Remember the Tax Cuts and Jobs Act of 2017? It has been a few years since those tax laws went into effect. Paperwork needs to be organized and appointments need to be scheduled with accountants. Others may be scrambling to get started since Tax Day (April 15, 2020) is right around the corner. It’s that time of year again - tax season! Some small business owners may be relaxing after having filed their taxes early. Note: This post has been updated for the 2020 tax season. It’s time to prepare forms and add up receipts. Tax season can be an anxious time for small business owners.
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