There are many steps small businesses can take to minimize their income taxes. Throughout my career as both a practicing certified public accountant (CPA) and an educator, I’ve developed a list of easy-to-use tax tips that I am happy to share. 1. Keep Organized The most important step to minimizing your small business tax is…
If you’re a sole proprietor, freelancer, or independent contractor, then you’ll likely need to pay self-employment tax. Considered the equivalent of payroll taxes that W-2 employees pay, it’s due on income earned and must be paid regardless of whether you receive a 1099-MISC for your services. The self-employment tax rate includes both Social Security and…
IRS Form 8832 is filed by limited liability companies (LLCs) to be taxed as C corporations (C-corps). LLCs also file Form 8832 to revert to being taxed as a sole proprietor or partnership if C-corp status was elected previously. An LLC that doesn’t file Form 8832 is taxed as a sole proprietor or partnership. You…
An employer identification number (EIN) is a unique nine-digit number that identifies your small business when you file taxes, open a business bank account, get a business loan, or perform other business activities. Obtaining an EIN is free, and you can apply for it online, by fax, or by mail. Online Application The quickest and…
TurboTax and H&R Block are both established names in the field of tax preparation; TurboTax is a leader in tax preparation software, and H&R Block has long been known for providing in-person tax preparation services. Both software have evolved to offer online tax preparation, tax software, and different levels of tax assistance. TurboTax is ideal…
Independent contractor taxes include federal income tax, self-employment tax, state taxes, and municipal taxes. Independent contractors who are sole proprietors report taxes on Form 1040, Schedule C. Tax returns are due on April 15 or October 15, if an extension is filed. Independent contractors are required to make estimated tax payments on a quarterly basis…
The Section 179 deduction allows business owners to immediately deduct up to $1,050,000 of the cost of qualifying new or used property, equipment, and vehicle purchases for the 2021 tax year. The advantage of the deduction is that you immediately receive the tax savings from an equipment purchase rather than gradually saving taxes through depreciation…
Form 1120S is the annual tax form used by S corporations (S-corps) and limited liability companies (LLCs) taxed as S-corps to report their deductions, gains, losses, and income from the business during the current tax year. You can download Form 1120S and prepare the return manually, or prepare it and file it electronically with ,…
