Income tax is a very important aspect of businesses because all businesses are required to comply. If you make even a small mistake with the compliance, you could be charged with late fees or some other form penalties. For this reason, you need to know how to file your federal income tax.
To make things easier, you may want to consider getting registered agents to help you out. Even if you get the aid of an agency, it’s always best to know the steps. Basically, you file your company’s federal income tax in four very simple steps. You can check out the steps below.
Step 1. Gather All Your Business Records
The first step in filing federal income tax is to gather all the needed records. These records include all the transactions in the year such as the income, deductions, sales, and expenses. Fortunately, there are a lot of software like Quickbooks to help you store all the data for you easily.
Step 2: Fill Up the Proper Forms
The next step is to fill up the proper IRS tax form. You can usually find the tax forms on the IRS website. You need to get the form that reports your earnings and expenses. Sole proprietorships and partnerships usually use a Schedule C attachment since they’ll be paying personal income tax. However, a corporate tax return requires you to fill up a Form 1120.
Step 3: Check the Deadline for Payment
One of the most important things to take note of is the deadline for filing. While different regions have different deadlines, generally, the IRS requires you to pay on the 15th of April. However, S corporations who file Form 1120S must file it the 15th in the third month. In any case, pay close attention to your designated deadline so that you don’t miss a date of filing.
Step 4: Pay Your Taxes
The last step is to simply pay your taxes. The IRS allows taxpayers to pay using an electronic system for more secure payments. They accept debit cards, credit cards, wire transfer, and checks. You may also cash to retail partners if you don’t want to pay electronically. The IRS even allows you to pay installments if the need arises. However, there are certain conditions that you have to follow should you choose this mode of payment.
As filing and paying your business’ federal income tax is a strict requirement for all companies, you have to be very diligent when handling it. It’s for this very reason that many business owners outsource service providers to help them with the whole process.
However, as a business owner, you still have to be on top of the situation. Even if you’re hiring a professional to help you out, you still must know how to do it yourself. At the very least, you won’t be fooled by service providers and you can do it yourself if your service provider decides to leave you. Just follow the above-mentioned steps and you’ll be able to file your income tax.