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Small Business Tax Tips

Learn how to file business taxes with help from Citizens Bank

At Citizens Bank, we care about your business just as much as you do. From planning your company's strategy to managing payroll and taking inventory, you likely wear multiple hats as a business owner. Filing business taxes is among one of the many legal responsibilities you're required to complete each year, and the process can be tedious no matter how big or small your company is. Based on the Small Business Administration's classifications for a business's size, we've put together this introductory guide for small to mid-sized companies to learn how to file business taxes with our small business tax tips. Your business's size classification may change based your industry, so it's important to check first. Then, speak with one of our Business Bankers to discuss specific business banking services that can help make managing your company's finances easy and efficient.

Year-end tax tips for business owners

In the months leading up to tax season, you'll want to make sure your finances are in order. This will make for smooth sailing if you file taxes yourself, or improve communication if you take your taxes to a professional. Whether you've been in business two years or twenty, use our small business tax tips below to ensure your taxes are filled out accurately and on time by the annual filing deadline:

  • Tax obligations - It's important for small business owners to be cognizant of both federal and state tax obligations. Review the Internal Revenue Service's (IRS) Tax Guide for Small Businesses to prepare for filing your returns, and make sure the guidelines are followed each year.
  • Business records - Maintaining good business records year-round will make filing business taxes a smoother process at the end of the year. Consider using an online tool to help you keep track of original receipts, expenses and business statements.
  • Business and personal expenses - It's important that your business and personal expenses are kept separate. If you haven't opened a business checking account, carefully denote any business purchases made with your personal account and consider one of our business checking accounts to help you manage your business funds more easily and securely.
  • Tax deductions - Your business may be eligible to receive tax deductions, including those for contributing to charity, traveling for business or adding money to a retirement fund. Review the IRS's deduction guide, and consider making end-of-year donations. Be sure to hold on to the necessary paperwork to support your deduction claims should you be audited down the road.
  • Full-time employees vs. independent contractors - The IRS does not classify independent contractors and employees the same from a tax and legal perspective, and if you hire both, it's important for you to know the differences. Many small businesses use contractors as they provide an affordable staffing solution or help provide needed short-term coverage. However, misclassification of this type of resource could result in costly legal fees. Before filing business taxes, be sure you know where your workers fall within the restrictions detailed in the IRS Independent Contractor or Employee guide.

Use a third party for filing business taxes

As a business owner, you likely know you're required to file tax returns annually for the corresponding accounting period, also known as a tax year, which is either a calendar or fiscal year depending on your business. If you have the expertise of filing business taxes, you may be able to file your taxes each year on your own. However, as your company grows, it may be a good idea to hire a certified public accountant, or CPA, to do your taxes for you. Hiring an accountant will help you stay on track with your company's financial development while foreseeing, and potentially mitigating, risks. He or she will likely have extensive knowledge in small business tax law and will be up-to-date with any changes in compliance regulations. In addition to filing business taxes, you'll also need to make sure you file income taxes for the personal wages you earn. According to the IRS, you are required to file an income tax return if your wages from self-employment exceed $400. An accountant can help make sure both personal and business taxes are in order each year.

Use business banking services from Citizens Bank

Whether it's a doctor's office, a consulting business or an antique shop downtown, owning your own business provides the freedom of self-employment but it also brings along many responsibilities. Use our small business tax tips to help protect your financial future, and use solutions from Citizens Bank to simplify your business banking. Our Quicken financial management software conveniently allows you to handle cash and credit sales, track transactions, assets and liabilities, and create invoices as well as pay bills. Additionally, our online banking tools can help you manage your business's cash flow while monitoring transfers and payments throughout the year. Not only will our business banking services help your business run more efficiently, but they can also help keep your finances in order to prepare you for filing business taxes. Speak with a Citizens Bank Business Banker today to find a banking solution to meet your business's unique needs.



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