You, like most small business owners, started your business to follow your dreams, not because you know anything about accounting or taxes. In fact, you probably don’t feel very confident when it comes to things like filing business taxes—most small business owners don’t. There are an abundance of forms to fill out and numbers to keep track of. And did you know that you should be paying taxes on a quarterly basis? One wrong move and you could get hit with an IRS audit. In fact, in early 2021 the IRS announced it will increase audits of small businesses by 50%. What’s more, recent tax law changes and COVID-19 stimulus programs have made business taxes more complicated than ever. Even if you manage to dodge an audit, you could be paying way more in taxes than you should be.
If you’re feeling lost or overwhelmed, it’s always a good idea to invest in a tax professional. They can help you avoid unnecessary fees, maximize your deductions, and even represent your business in the event of an audit. But for new small businesses struggling with cash flow, hiring outside help may not be an option.
Whether you’re taking the leap in tandem or taking a DIY approach, here are five important things you should understand when it comes to preparing and filing your business taxes.