Whether you’re a startup founder or a small business owner, filing your taxes can be one of the most stressful processes you have to address. There are mountains of documents to assess and numbers you have to compute to ensure business compliance.
On top of that, filing of taxes has to be done promptly—no late, no ifs, and no buts. Failure to comply may result in legal consequences. Such consequences may include penalties, fines, or even permanent closure of your institution.
This is why everyone must settle their taxes accurately and promptly. However, just thinking about the tax season can be a headache, but it shouldn’t be. That said, below are the ways to help you ensure smooth and easy filing processes.
But if this is your first-ever tax filing season, you want to ensure that you have the essential documents, particularly your federal tax ID. If you don’t have one yet, search for how to obtain tax ID number online to understand how the process works.
- Never Procrastinate
Procrastination refers to the practice of putting tasks aside, especially if those are far from their deadlines. Sometimes, if these responsibilities make you feel pressured, you feel less motivated to do them and decide to work on them later to postpone feelings of anxiety.
Procrastination brings nothing but risks. If you wait until the deadline, you’ll be forced to work as fast as you can to process all the requirements before the said date. This will increase the likelihood of making mistakes in the process.
In addition, if you fail to file your taxes on time, you’ll be subject to penalties as high as 25% of your total taxes. For example, if your quarterly tax amounts to USD$20,000, your maximum penalty would be USD$4,000.
To prevent the late filing of taxes and its penalties, apply for an extension to the Internal Revenue Service (IRS) before the 15th of April. Visit their website and look for IRS Form 4868. This will give you an additional six months to process your tax returns
But if you process and file your taxes as early as possible, the IRS might offer you a refund or rebates, depending on the circumstances. This is why everyone is encouraged to promptly and efficiently address their tax obligation.
- File Your Taxes For Free
Filing taxes may include additional fees, which may vary from business to business, especially when you hire someone. This is another reason filing tax returns is stressful and cumbersome. Fortunately, there are two ways you can avoid those extra fees.
- Option 1 (For Those Who Earn Less Than Or Equal To USD$62,000): Go to the IRS website and look for the tax processing software for free.
- Option 2 (For Those Who Earn More Than USD$62,000): Use the free forms offered on the IRS website.
- Don’t Panic
When you realize that you can no longer pay the taxes you owe, you’ll be frustrated, and that’s normal. However, most people often panic in these trying times. Although the behavior seems inevitable, you should learn how to calm down and think straight.
When you start to panic, everything will be in chaos. If you can’t settle your tax dues on time because you lack the resources to do so, you may apply for an installment plan. You can set this up by visiting IRS online. This allows you to extend your payment for several years.
The payment plan may vary depending on several factors, such as the amount owed and the capacity to pay. Just make sure to settle your dues accordingly to avoid penalties.
- Address Your Back Tax Issues
What happens when you forget to pay your dues? Would you be free from your taxes? Of course, not. It will only grow because of the penalties you have incurred. Not just that, you’ll also be subject to aggressive tax collections.
So, instead of wishing those taxes you left behind to go and fade away with time, you might want to address them now as soon as possible. If your business can’t settle them because of different circumstances, IRS has another program you might want to apply for aside from its installment payment plans—the Offer in Compromise.
Offer in Compromise is a program for those unable to pay their returns because of financial troubles. In this program, the taxpayer will be evaluated based on different factors, such as assets, living expenses, and earnings.
If you pass the evaluation, a considerable chunk of your taxes might be deducted from your total debts.
- Don’t Forget Your Tax Deductions
If you’re looking for ways to lower your taxes, then this is one strategy you shouldn’t miss. Tax deductions help decrease your taxable income, lowering the returns you have to settle to the government.
You may consider some basic company expenses to lower your taxable income. These may include:
- Business Meals: As high as 50% can be deducted from your total meal tax when filed accordingly.
- Work-Related Travel Expenses: These include hotel bookings, plane tickets, and other essentials when conducting business trips abroad and locally.
- Business Insurance: This includes all the insurance you have to protect your business, including your renter’s insurance if you rent a place where you conduct your business.
- Office Supplies: All your office supplies can be written off as a part of your expenses as long as they’re used to conduct your business. These include printers, papers, inks, pens, desktops, and more.
- Don’t Wait For The Tax Season
One of the best ways to reduce the stress when filing tax returns is to stop waiting for the tax season before you get your hands working. It’s a good idea to start gathering all the documents required and organize them properly as early as possible.
In this way, the process of evaluating your taxes will be easier and more seamless than before. You’ll also prevent mistakes that can lead to potential losses, especially if you’ve forgotten to include all the tax deductions mentioned above.
Final Words
Filing tax returns is not only time-consuming but also stressful and cumbersome. Unfortunately, you have no choice but to do it accordingly. Otherwise, penalties will get back to you. But there are ways to keep it less stressful. You can make use of the tips discussed above to facilitate the seamless filing of your tax returns.
