Documents You Will Need in Order to File Your Business Taxes
Updated: Dec 14, 2021
As a small business owner, trying to determine your tax liability, what your filing requirements are, and how to file a federal income tax return can be difficult. Even if you are seasoned business owner, it can be overwhelming to try to keep up with changes in federal tax laws, state tax laws, and small business tax deductions. With tax season rapidly approaching, taking the time now to gather and organize the proper tax information will help make the tax return process much easier. The following are the top four documents that you and your accountant will need to complete your tax return.
Personal Information
You will need to provide personal information such as legal name, current address, and your Taxpayer Identification Number. A Taxpayer Identification Number (TIN) is an identification number used by the Internal Revenue Service (IRS) in the administration of tax laws. The most common TINs are your social security number or an Employer Identification Number (EIN).
Previous Year’s Tax Return
You will also need to bring your previous year’s tax return. Not only does it help your accountant or tax professional understand your business, but it also offers insight about the deductions your business has, or has not, been taking.
Financial Business Reports
Your accountant will need copies of your financial statements such as your profit and loss statement, balance sheet, and statement of cash flows. All these documents are essential in ensuring the accuracy of your taxes. To learn more about the importance of these financial reports, check out this previous blog post.
In addition, bring documents that support the information reflected in your financial statements. Some of these documents may include customer contracts and bank statements to support the income recognized by the business. Vendor invoices, receipts, depreciation schedules, and payroll statements to support the expenses incurred by the business.
Tax Forms
The tax form to file a federal tax return will be different depending on whether your business is structured as a sole proprietor business, LLC, S-Corporation, C-Corporation, or partnership. These are the forms each of these businesses use:
Sole Proprietor: Attach a Schedule C to your personal income tax return.
Limited Liability Companies (LLC): This depends on how the LLC is setup for tax purposes. If set up as a corporation, LLCs must use Form 1120. Otherwise, single-member LLCs file Schedule C, and multi-member LLCs file Form 1065 with schedule K-1 for each member of the LLC.
S-Corporation: Form 1120S with Schedule K-1 for each shareholder.
C-Corporation: Form 1120.
Partnership: Form 1065
The deadline to file tax returns for multi-member LLCs, S-Corps, and partnerships is March 15, 2022. The deadline to file tax returns for Sole proprietors, single-member LLCs, and C-Corporations is April 15, 2022.
At CPA by Choice, we understand that tax season can be overwhelming for business owners. We want you to focus on your business while we handle your accounting needs. We are here to prepare business taxes, understand which tax forms are required for your business, and to apply all guidelines set by the IRS so your business is compliant. Allow us to take on the accounting responsibilities of your business. We are available to answer your questions, feel free to call us or send us a message.