How do I File an ITR As a Shopkeeper or Small Business Owner in the US

by Mergix Financial tax services denver

These days, Googling things have been thought to be the solution whenever people need information. Similarly, most of you might google ‘best tax preparers near me’ or ‘best ‘tax services near me’. Any update? Did you actually find anyone online?

Well, let’s get to know more about filing taxes and information that will actually be of help to you. There are various ways to file a federal income tax return for your small business, depending on whether you administer the business as a sole proprietorship or use a legal entity such as a corporation or an LLC.

Every type of entity demands a separate tax form on which you report your income and expenses. Taxable business income is usually calculated in almost the same ways, regardless of the form you use. We have gathered four easy and straightforward steps to file your ITR without any hassles. Following these steps will not only save you a lot of time but also will keep you out of any legal friction against IRS. Also, you won’t have to google ‘best tax preparers near me’ or ‘best tax services near me’. So, without any further ado, let's get started.

 

1) Gather All Business Records

First of all, you need to collect all the relevant records. You must have every record right in front of you reporting your business earnings and expenses before filling out the tax form to file an ITR.

Using computer software or spreadsheets to maintain, organize and keep track of all transactions during the financial year makes calculating deductions & income much easier than manually organizing or remembering every sale and expenditure that occurred throughout the year. You can work with software like QuickBooks and Quicken, which allows you to import information directly into your tax return.

 

2) Determining the Right IRS Tax Form

Following organizing and tracing every record, you need to find the correct IRS tax form as per your business category. You ultimately need to report and pay tax on your business earnings to the IRS. But, choosing the correct form for the same completely depends on how you are operating your business.

Most often than not, Shopkeepers or small business owners in the USA adopt a sole proprietorship. This permits them to report their business income and expenses on a Schedule C attachment to their personal ITR. IRS allows you to use the Schedule C attachment if you operate your business as an LLC and sole owner. Nevertheless, if you use a corporation or elect to treat your LLC as one, you need to prepare and file a separate corporate tax return on Form 1120 (or Form the 1120S if you are an S-Corp). For finding the correct tax form for your small business or a shop: Either you can approach an expert or a professional accounting firm to find the answer for you. Or you can answer simple questions about your business income and expenses on various online softwares and it will state or even fill in all the right forms for your business.

 

3) Now Let's Fill Those Forms

The next step is to fill out Form 1120 or your Schedule C. You can browse the official website of IRS to generate the form if you are going to report your business earnings on Schedule C. You can also generate the same after you input all of your financial information on software that helps you to find the correct form for your business.

Since Schedule C records all the expenses you can claim and is only two pages long, it is an easy and less complicated way for filing business taxes. You can subtract your expenses from your business earnings to calculate your net profit or loss post completing all the entries. Following the calculation of net profit/loss, transfer this number to the personal income tax form and incorporate it with all the other taxable items. It is as easy as that.

Nonetheless, if you are using Form 1120, you calculate your taxable business income with the same method, except the form requires more details that may not always apply to you as a small business owner. The biggest disadvantage of filing a Form 1120 is you need to file your business and personal ITR separately hence more work.

 

4) Watch Out For Due Dates or Deadline

You should always be aware of the due dates and deadlines of filing the ITR and particular forms relevant to your business. When you are filing a Schedule C, it becomes part of Form 1040. Therefore, no separate filing deadlines are applicable. The form is commonly subjected to the same April 15 deadline.

If you are filing your ITR as a C-Corp, you need to fill Form 1120. That means you must file the same by the 15th day of the fourth month following the close of the tax year. For most taxpayers, it usually is April 15. On the other hand, if you are administering your business as an S-Corp, you need to file Form 1120S. That means you must file the same by the 15th day of the third month following the close of the tax year. For most taxpayers, it usually is March 15. Keep in mind, you cannot send an 1120S form to the IRS with your personal income tax return.

 

Should you file your taxes on your own or hire someone else to do it for you?

You doing your own taxes are free. And that's the biggest draw, but it can be complicated, time-consuming, and can take you away from running your business. Hence the reason why you look for ‘best tax preparers near me’ or even look for firms that would provide ‘best tax services near me’.

But in case you decide to hire a firm to do your taxes, it not only saves you time but also gives you confidence. It makes tax time a whole lot easier. If you aren't sure who to hire, you can visit our website www.mergixfinancial.com and make your own choice.

You can approach us anytime 24/7, for any bookkeeping, accounting, or tax preparation services and consultation. We are always there to help. We are Mergix Financial.

Mergix Financial Denver's Independent Accounting Firm 

If you are looking for a blend of personal service and expertise, you have come to the right place! We offer a broad range of services for business owners, executives, independent professionals, and individuals. Our customized cloud accounting and office management services are designed to meet your business or personal needs regardless how simple or complex. Our company is guided by trusted management with more than twenty years of accounting experience. Our rates are affordable. We are experienced and we're friendly. Please call us for a free initial consultation. 

Mergix Financial 
100 Fillmore Street, Suite 500 
Denver, CO 80206 
admin@mergixfinancial.com 
Phone: (720) 340-7434 

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Created on Dec 18th 2021 07:15. Viewed 207 times.

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