Managing the challenges of running a business is hard enough without worrying about compliance with taxation laws. Not keeping up with your dues and filing returns on time can result in the company incurring penalties and fines, not to mention the risk of audits. Avoid this situation by hiring a trained accountant to deal with this aspect of your business. If you live overseas and run a business back home, you’ll need the advice of an experienced tax CPA for U.S. expats. These professionals can guide you with filing returns with the IRS and the relevant tax authority in your residential location. Here’s an overview of how to prepare tax returns for your business.

Tax prepping should start when you establish the business

When establishing and registering the business, you’ll correctly classify it as a sole proprietorship, partnership, S Corporation, C Corporation, Limited Liability Partnership, Limited Liability Company, or Single Member LLC. This step will ensure that you file returns according to the laws relevant to the company category. Consulting an experienced attorney and accountant will help you determine the forms to complete and submit each year.

Hire the right accountant at the onset

Hire an in-house accountant who can maintain detailed records of the business income and expenses throughout the year. Although this added cost may seem wasteful when you’re bootstrapping the company, the return on investment will be worth it. The professional can track your gross and net profits. They’ll also advise you on the tax-saving strategies and deductions you can take advantage of during day-to-day company operations.

An added positive is that you’ll avoid issues like interrupted cash flows that could cripple the business before it gets off the ground. Having your financials sorted and up-to-date will make it easier to file returns when tax reason rolls around. Not to mention achieving efficient monitoring of the fiscal health of the company in real-time.

Maintain records of income and expenses

Each time you receive income from the sale of a product, service, or any transactions conducted by the company, the IRS receives information about it. The agency also gets notifications of rental income, payments in place of dividends, royalties, prizes, and awards, so record all the expenses you incur and the payments you make. Even if you don’t receive the relevant forms like 1099-MISC and 1099-NEC, the IRS acquires details of the transactions from the parties you conduct business with.

Not reporting them on your return can be a red flag and attract an audit. If you do get audited, you’ll need an experienced white-collar Orlando criminal defense attorney to resolve the issues. Also, keep in mind that your business tax returns must reflect only the expenses made for the company. Carefully separate personal and business spending by using distinct credit cards and bank accounts.

Get advice on growing the business

When you’re ready to expand the business, use the accountant and attorney’s advice to buy or acquire assets like real estate, equipment, or any other tangible items that can be claimed as deductible expenses in your return. You’ll also get expert direction on managing payroll, declaring bonuses, and diverting funds to retirement accounts for your employees. These payments could attract taxes, so make sure to report them in your return.

American tax laws are complex, and completing the paperwork is a tedious, time-taking task. Leaving it to the last minute is never advisable, so you may want to hire the services of a trained accountant to maintain records and streamline the process well before the due dates approach.

The post How to Prepare Taxes and File Returns For Your Business appeared first on InsightsSuccess.

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