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Tax Return Tips For Small Businesses

downloadFor your company to be on the safe side of law, you need to get ready tax returns. As an entrepreneur you need to comprehend how to effectively prepare the returns. To take you through, here are some guidelines that you should adhere to.

Understand the different kinds of taxes

There are four primary kinds of taxation that the govt needs you to pay by the end of every quarter:

Self-employment tax: this is usually compensated by the self-employed individuals. By paying the tax you get a variety of advantages such as: survivor, disability, and medical insurance.

Income tax: all companies other than partnerships need you to pay this tax. Partnerships need to file informational return. You should observe that income tax is usually paid as your company generates cash throughout the year, and not in only one lump sum. As an entrepreneur you should withhold the income tax from your workers unless they are independent contractors.

Excise taxes: these are paid if you manufacture and sell certain items such as cigarettes and fuel. The taxation are also known as sin taxation.

Employment taxes: these are the taxes that you pay if your company employs other individuals other than yourself. The taxation protect your staff’s social security among other factors.

Defer the payments if your cashflow allows

Deferring tax payments decreases your overall taxed earnings for the present year. Although, it’s recommended that you defer payments, you should not delay payments for the 12 months. Professionals suggest that you should delay the expenses of the week that you are filing the tax return forms. While the exercise helps in decreasing the tax load, you should not delay the payments if you are foreseeing changes in your income tax rates. You should also not delay if you have any questions about the future or solvency of your customers.

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