CoatingsPro Magazine

MAR 2018

CoatingsPro offers an in-depth look at coatings based on case studies, successful business operation, new products, industry news, and the safe and profitable use of coatings and equipment.

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20 MARCH 2018 COATINGSPROMAG.COM Money Matters Preparing to file helps you avoid Internal Revenue Ser vice (IRS) audit triggers and mistakes, claim write-offs, and get a higher refund. I f you are new to entrepreneurship, you might be filing small business taxes for the first time. Filing taxes for your small contracting business is simpler than it would be for a large corporation, but you must prepare. By March 15, you need to know how to file a small business tax return. What You Need Before you file your return, gather documents that will help you fill out the form. Preparing to file helps you avoid Internal Revenue Service (IRS) audit triggers and mistakes, claim write-offs, and get a higher refund. Be sure you have the following information on hand before filing your return. • Taxpayer Identification Number: Every small business owner needs a Taxpayer Identification Number (TIN) to file a tax return. There are several kinds of TINs, including Social Security numbers and Federal Employer Identification Numbers (FEINs). If you are a sole proprietor with no employees, you can use your Social Security number. If you have employees, use your EIN. If you do not have a TIN, apply for one through the IRS website. Did you lose your Tax Identification Number? First, look at old documents that might contain the number, such as a past tax return or bank state- ment. If you still can't find your TIN, call the IRS's Business & Specialty Tax Line at (800) 829-4933. • Financial Records: Report your business's income and expenses on the tax return. To file, you need complete financial records, including both financial state- ments and supporting documents (e.g., receipts). You can use online accounting software to keep your records organized. Knowing how to file federal income taxes for small businesses involves a lot of information. Your financial records also help you claim deductions and prove the accuracy of your return. The following are examples of financial records that will help you file. • Profit and Loss Statement: The profit and loss statement shows your business's revenue and expenses throughout the year. Use this statement to report income on the tax return. The profit and loss statement for your small business shows all sources of income, and it lists all your expenses. You can use the expenses reported on your profit and loss statement to claim write-offs. Expenses could include: • Utilities • Insurance • Supplies • Professional fees • Interest paid • Travel and mileage expenses • Petty cash expenses • Balance sheet (Your business balance sheet shows assets, liabilities, and equity. To file your business tax return, you need your balance sheet from the beginning and end of the year. Use the balance sheet to report your annual income from business operations.) • Supporting Financial Documents: As you prepare the return, look for documents that support infor- mation in your books. Supporting documents will offer proof in case of an audit. The more financial documents you can provide that show the same information, the better. For example, find receipts, invoices, and bills that show expenses paid and income received. • Business Use of Your Home and Vehicle: If you use part of your home for business, you can claim a deduction. Use Form 8829, Expenses for Business Use of Your Home, to calculate the percentage of square footage in your home that you use for business. You can also claim a deduc- tion for business use of your vehicle on your tax return. You might be able to write off mileage (excluding your commute between work and home), insurance, and maintenance. For both the business use of your home and vehicle small business tax write-offs, you need to have records showing accurate expenses and business use. Necessary Forms e form you file for taxes depends on your business's structure. Each type How to File a Small Business Tax Return By Amanda Cameron, Content Writer for Patriot Software

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