Tax Tips for Entrepreneurs
5 Tips for Filing Returns for Sole Proprietors
Written by Ashwin Satyanarayana for Gaebler Ventures
Started a business on your own? Discovering new things as you go along can get frustrating sometimes, especially, if they need a lot of attention. One such task is filing tax returns. Here's how you can simplify filing returns.
Have you started your own business?
Did you, like most business owners, start out solo? While it could be euphoric to be on your own, it is also true that the onus of taking care of the business operations lies on you. Filing your tax returns is an important area you need to pay attention to. Chances are that you haven't formed a company as such, but you did start selling your products or services. In that case you are a sole proprietor and you will need to file your returns as an individual with a minor difference that you can note here. Here are five tips to file your returns properly:
Know the procedure: If you were an employee, the employer would do everything for you and deduct tax at source. However, since you are on your own, it is important to know which forms you need to fill out and what you need to do to file your tax returns quickly and efficiently. Make sure you get your information right about the process you need to follow and it should just be a matter of getting things done after that.
Keep records: Without proof, nothing is valid. Make sure you keep records of all the payments you make, bills you pay, invoices you get paid through, credits payable to you, bank statements and records, credit reports - all possible and relevant documents be it personal or business. Keeping records is mandatory and there is no way you can benefit from any savings or credits made available to you without these documents as proof.
Stay organized: In the process of running your business, you are bound to make a thousand payments and receive just as many invoices to get paid. If you have to file your tax returns once a year, can you imagine the chaos this might cause when you suddenly have to rummage through heaps of paper? That's why it is important to have a system of filing and retrieving your documents which is possible only if you organize yourself well.
Know your questions and answers: Even if you are considering a professional's help, you will still need to know what numbers you must be on top of. You will have to know what questions to ask your tax professional and anything else you need to know. You will need the Schedule C - download and study it. Plenty of information exists on sites like irs.gov which provide authentic and accurate information about filing taxes.
Get help, if you need it: Sometimes, you will still not be able to file taxes all by yourself either because you don't have the time, inclination or know-how about how to go about it. In any of these cases, it is best to approach professionals trained or experienced to do it for you. Get someone who is professional and you trust to do it for you. It saves you time, energy and helps you focus on what you are good at.
Ash has an undergraduate degree in engineering and an MBA from Ohio University. Today he is a corporate trainer, business coach and a freelance writer.
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