Everything You Need To Know about filing your taxes for your business. SUBSCRIBE to @Learn With Shopify to get the knowledge you need to start and grow your online business: https://bit.ly/3xNlqri.
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Tax season is here, and whether it’s your first year in business or your tenth year, it always feels like there’s an endless list of tasks to get through to file your return. If you live in the US, this step-by-step guide will help you get organized so you can get a jump start and file your 2016 tax return well before it’s due.
Step 1: Remember These Tax Deadlines
Tax deadlines can sneak up on you. Missing them can result in expensive penalties.
Your taxes are due on April 17, 2017. Depending on the nature of your business, you may also need to submit additional documents to the IRS before that date.
Add these dates into your calendar and don’t miss a single deadline:
February 2: Forms 1099 and W2 Postmarked
If you paid an independent contractor or employee more than $600 in 2016, you should have already provided them with a 1099 or W2, respectively, on or before February 1.
March 16: Partnership Returns Due
March 15 is the deadline to file individual and partnership tax returns. The earlier deadline gives partners a chance to receive Schedule K-1’s before the personal tax return due date.
April 17: Corporate Tax Returns Due
March 15 is the deadline to file your corporate tax return (forms 1120 and 1120S), or apply for a tax extension.
April 17: Individual Returns Due
April 17 is the deadline to file individual or sole proprietor tax returns (forms 1040), or apply for a tax extension.
Step 2: Get Your Receipts In Order
If you haven’t done so already, it’s time to go paperless. Storing your receipts online will save you from a mountain of paper to sort through come tax time.
These tools will help you organize your receipts the paperless way:
Evernote (Free)
You can upload and access scans or photographs of receipts, business cards, and important documents from any device. Use the ScanSnap Evernote Edition Scanner to upload documents straight into your Evernote account.
ShoeBoxed (up to $100/month)
If you have a huge backlog of receipts to store, you can opt to mail them off in one of Shoeboxed’s ‘Magic Envelopes’, and Shoeboxed will enter all of the data for you.
Expensify (starts at $5/month for each active user)
Payments made with connected bank cards are automatically imported, and cash expenses are added manually. Expensify’s mobile app also lets you photograph and store receipts on the go. Receipts are automatically matched with the correct expense using the service’s SmartScan technology.
Step 3: Get Your Bookkeeping up to Date
To file your taxes, you need to ensure your books are up-to-date. A clear set of books gives an accurate view of your business’s income and expenses. They’re also your first line of defense in case of an audit.
You can use a small business accounting software to process your own bookkeeping. Alternatively, if you’d prefer to have a professional do it for you, look into hiring a bookkeeper either locally or online.
If the information in your books is incorrect, you run the risk of unintentionally making a false claim to the IRS.
When it comes to getting your books up-to-date, choose a method that’s best for you based on the amount of time you have to dedicate to bookkeeping, your budget, and how confident you feel about managing your own books
Step 4: Submit 1099s
If you paid an independent contractor more than $600 during the tax year, you should have already sent a Form 1099 to the contractor by February 1 and you’ll need to submit a copy to the IRS by March 31, 2017.
Step 5: Understand Sales Tax Requirements
Sales tax laws are complex at the best of times. You’ll want to consult your accountant on this, but let’s briefly look at how sales tax applies to online businesses.
State tax requirements are dictated by a legal concept called ‘nexus’. Nexus means that a business needs to have some physical connection to a state in order to collect sales tax there. If your business develops nexus in a state, you must collect sales tax in that state.
— RESOURCES —
► 8 Steps to Prepare Your Ecommerce Store for Tax Filing https://www.shopify.ca/blog/16889288-8-steps-to-prepare-your-online-business-for-tax-time
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