Roseville + Sacramento Accountant for Small Business Tax Returns

Preparing tax returns for your small business can be a tedious and complicated process. Not only do you want to ensure that you claim the tax credits and deductions your business deserves, but you want to avoid making any filing mistakes that will require an amendment. If you require assistance filing taxes for your small business, you should consult with an experienced Roseville small business accountant today.

At Cook CPA Group, our accountants will work tirelessly to provide you with the service you need to properly manage your tax liability. Let our firm handle the intricate process of filing business tax returns while you focus on how to operate and expand your business.

Tax Requirements for Small Businesses

If you are a new business owner that is filing taxes for the first time, this may seem like a daunting task. However, if you take it one step at a time, the process of filing your taxes will become easier every year. One of the most important pieces of information a business owner should know is that the type of business you established will determine your tax filing requirements.

The following is a list of the tax requirements for certain types of small business.

Sole Proprietorship

As the name implies, a sole proprietorship is a business that is established and operated by a single person. Sole proprietors do not file a tax return for their business; they must file a personal income tax return based on the income or losses from the business. If you are operating as a sole proprietor, you must remember to calculate your self-employment taxes in addition to your income.

Self-employment taxes are essentially Medicare and Social Security taxes. A self-employed worker must estimate the amount of money they will owe for these taxes and pay them to the Internal Revenue Service on a quarterly basis. Failure to pay these taxes could have several consequences. For example, your Social Security retirement benefits may be affected, or you could owe a large tax bill for failing to pay your self-employment taxes.

To report the income from your sole proprietorship on your annual tax return, you must use a Schedule C or Schedule C-EZ. To calculate and report your self-employment taxes, you must use IRS Form 1040-ES, “Estimated Tax for Individuals.”

Partnerships

A partnership is a type of business structure that involves two or more people operating the business. There are multiple types of partnerships that can be established, from general partnerships to limited liability partnerships. Each type of partnership will have its advantages, like preventing a lawsuit from being filed directly against a managing partner.

While certain information about a partnership is required when filing a tax return, the partnerships as an organization are not required to pay income tax. Pass-through taxation is the reason for this. A business that has pass-through taxation will place the burden of income taxes on the owners of the business. This allows the partners to avoid being taxed at high corporate tax rates.

The owners of a partnership must file their portion of the partnership’s income and losses on their personal tax return. The partners are also responsible for paying self-employment taxes. Additionally, the partnership as an organization must file an annual return of income and other types of taxes.

Corporations

Even small businesses can be organized as corporations. There are two types of corporations that can be established: S-corporations and C-corporations. However, both types of corporations are subject to double taxation.

Double taxation is when the income from a corporation is taxed, and then any dividends received by shareholders are taxed upon distribution. There are multiple types of forms that you may need when filing taxes for a corporation. That is why it is a wise decision to consult with an experienced accountant to determine your options.

Limited Liability Companies

Limited liability companies (LLC) combine the legal protections associated with corporations with the tax rates of a partnership. This means that you will not have to deal with double taxation as LLCs operate on a pass-through taxation system. Additionally, the IRS requires that owners of LLCs submit a Form 1065 every year. This form deals with information regarding income.

Understanding how taxation works for each of these businesses will make it easier to handle tax filings for your small business.

Our Sacramento Tax Return Accountants Can Help You Manage Your Tax Liability

If you need help managing the tax liability for your small business, you should contact an experienced Sacramento tax return accountant today. The accountants at Cook CPA Group have a wealth of experience handling various types of tax issues for businesses in Roseville, Sacramento, and across the State of California. Our team of accountants will help you streamline the process of filing taxes for your business.