For small business owners, taxes are an extra headache. But they don’t have to be. With these business tax filing tips, you’ll be well on your way to a simpler, hassle-free filing.
LLC? Sole Proprietorship?
The vast majority of small businesses are sole proprietorships: a single person, so their tax filings are fairly simple: although the details can take a while, and there are lots of edge cases to consider, sole proprietorship tax filing is generally a matter of applying the rules about what you can deduct and what you can’t, and then doing your income tax filing normally.
If you’re doing an LLC tax filing, your course of action will depend on how many members your LLC has. For LLCs with just one member, the owner’s Schedule C from their 1040 determines the amount of income added. For an LLC with more than one member, the LLC itself needs to file a Form 1065, and each individual member will get a form K-1 informing them of their income.
Rental Income and More
Real estate is a popular form of small business. It’s possible to run a small real estate business while working full-time in another position, and the steady income combined with capital appreciation means that real estate can be a great long-term investment. Even when real estate prices drop significantly, it’s generally more of an opportunity than a crisis.
However, one of the big advantages of real estate as a business is also one of the big costs: the tax situation in real estate can be incredible complex. You’ve got all sorts of deductions, for things like interest and depreciation, not to mention the incentive packages state and local governments love to dole out. It’s best to get rental income tax advice from tax advisors who can cover all the difficulties for you.
Tax Advice: Ask Professionals
You don’t want to sort through the complexities of rental income tax deductions as they related to your small business filing, or to try to sort through depreciation tables just to find out whether or not you need to cut the government a check for this quarter.
Fortunately, the booming small business sector has led to boom in tax professionals willing to work with them. You’re likely to get plenty of help, and it’s not going to be ridiculously expensive. You can’t expect tax filing to be too easy, but it’s surprisingly less painful than you might expect.