Make Tax Season Easier Through These Tips
Tax season is a tense time for businesses and individuals alike. It is important to do it right the first time around. Mistakes in filing taxes can end up being costly. You can significantly reduce the chances of making errors in filing taxes by paying attention to detail.
Accounting and finance skills are essential if you want to file taxes correctly. In this blog post, you will learn about accounting and financial tips to correctly file taxes.
How to become a tax preparer: Your complete guide (thomsonreuters.com)
Preparer Tax Identification Number (PTIN)
A preparer tax identification number (PTIN) is issued when you begin to file taxes. You need to renew the number annually by visiting the IRS website. There is no fee for the renewal of the identification number.
You must put this PTIN in every return file that is submitted to the IRS. To apply for the PTIN, you need to provide the following information.
- Social Security Number
- Name, address, and date of birth
- Business name, address, and phone number
- Individual tax return of the previous year
- Filing status
- Felony convictions, if convicted
- You must pay $30.75 for obtaining the PTIN. This fee is paid one time and is non-refundable.
- Information about the professional certification of an enrolled agent, CPA, enrolled actuary, enrolled retirement plan agent, and state license.
Once you have gathered the above information, you can apply for the PTIN online. You can pay the PTIN fees by eCheck, debit, or credit card. You will receive the PTIN online once all the requirements of filing the form are completed.
Get the Right Knowledge
You need to know the ins and outs of the business to submit taxes correctly. This requires communicating with your accountant or outsourcing a bookkeeping service provider.
A professional accountant will assist you in entering the right information about your business in the tax form. The help of a professional accountant is critical to file tax returns without any errors.
The accountant will give you professional advice based on the type of business you operate. Moreover, the accountant will also help you file the right type of taxes. You will know about the general types of taxes that businesses need to include in the tax form such as:
- Employment taxes
- Income taxes
- Excise taxes
- Self-employment taxes
- Sales taxes
Let’s take a look at each of these taxes in a bit more detail.
Income tax
An income tax is filed by all types of businesses except partnership businesses. Partnerships are required to file an information return instead of income taxes.
Businesses are required to submit income taxes by submitting an appropriate form. You should refer to the business structures to know the returns that must be filed depending on the type of business.
Sales tax
A sales tax is paid by the consumer who buys a product or service. The sales tax is a type of pay-as-you-buy tax. Consult with your accountant to know more about entering sales tax-related information about your business.
Estimated tax
You have to pay an estimated tax on income each year that can be higher or lower than the actual tax payable to the government. To know whether you have to pay an estimated tax, you should refer to Publication 583 of the IRS.
Self-Employment Tax
Self-employment tax is imposed on self-employed individuals. The tax is a Medicare and social security tax that has to be paid by all individuals who are not employed. The tax is imposed so that the federal government can provide benefits that are available for employed individuals including Medicare, survivor benefits, disability benefits, and retirement benefits.
The self-employment tax is paid by submitting Form 1040 or 1040-SR if you fulfill any of the following requirements.
- Self-employed
- Net earnings exceed $400
- Employed by a qualified church or firm controlled by the church that has elected to be exempt from Medicare and Social Security taxes AND net earnings are over $108.28
You must note that there are also exceptions regarding self-employment taxes for individuals from certain trades such as fishing, foreign government, notary public, and state or federal employees. To know more about self-employed taxes, you should consult a certified professional accountant (CPA).
Employment Taxes
Employment taxes are paid by businesses with employees. As an employer, you must file employment taxes that include the following:
- Federal income tax withholding
- Medicare tax
- Federal unemployment tax (FUTA)
- Social security tax
For more information about employment taxes, you should contact a professional accountant.
Excise Tax
Excise taxes must be submitted by certain types of businesses. This type of tax is filed by a firm that engages in the manufacturing and selling of products or the performance of certain types of services.
Tips for Self-Employed Individuals to Save Taxes in 2022 – (maximliberty.com)
Form 720 mentions certain types of categories for excise taxes that include the following.
- Fuel taxes
- Communication taxes
- Air transportation taxes
- Taxes on first retail sales of trailers, trucks, and tractors
- Sale and/or use of certain equipment
You should also know about Form 2290 which is about excise taxes on the use of certain types of tractors, trucks, and buses on highways. You have to pay this tax if the vehicle has a gross weight of over 55,000 pounds.
Conclusion
Make sure you contact a qualified CPA for tax related information. A professional can guide you in correctly filing taxes for your business.
You should also consider outsourcing bookkeeping tasks. Professional bookkeepers can record taxes as per the accounting standards and rules. This will help in accurate filing of your taxes.
Maxim Liberty is a reliable outsourced bookkeeping service provider in the US. We provide expert accounting services to small and medium-sized businesses. Our expert accountants are well-versed in accounting standards and rules. We can record all bookkeeping transactions using the double-entry accounting method. You can dial (703) 957-6938 today to know more about our services.
