Tag: 2022 tax season

What to Know & Do Going into 2022 Tax Season for Small Business

The 2022 Tax Season for Small Business: How to Start

2020 was not a perfect year to say the least. It’s not easy to keep tax prep in mind during a normal year, let alone a year like that one! Luckily, we specialize in small business finance—and have some helpful tips for you to navigate the 2022 tax season like a pro. 

Organize Your Financial Records

The first step in preparing for just about anything? Getting organized! Take time to get all of your business’s income statements, payroll documents, credit card statements, receipts, etc. together before you do anything else. Getting organized for tax season also involves getting important dates and deadlines on your calendar. Depending on what type of business entity you own, tax deadlines will vary—so be sure to know when things are due!

Fill Out All Necessary Tax Forms

In addition to getting all of your financial statements and reports together, you’ll need to find out which forms are necessary for your business. These forms (whichever apply to you) will be in addition to your personal 1040 form. Keep in mind that you may need to fill out additional forms if you’re self-employed, you run your business from home, etc. 

Things to Consider When Preparing for Tax Season

Since things haven’t exactly been “normal” over the past couple of years, there are other things you should think about when prepping your taxes. Some of these things include:

Did you work in multiple states?

If you did, you’ll need to file taxes for the state that you live in and the states you worked in. This process varies from business to business but, generally speaking, you won’t have to pay taxes multiple times on the same income. 

Did you start freelancing?

The freelancing market has surged in the last couple of years thanks to the pandemic. If you were a part of that surge, the IRS considers you a small business. You’ll need to pay taxes on every dollar you earn. When you work with a W-2 company, they automatically withhold these taxes from your paychecks. When you freelance, however, you pay those taxes after the fact. A good rule of thumb for freelancing is to save 30% of your freelance income for tax season or make estimated payments every quarter. 

Did you receive a loan from the PPP?

To keep things simple, PPP loans that have been forgiven are not considered taxable income. Even if the loan is forgiven, business expenses paid for with a PPP loan are deductible. These are general rules when it comes to federal taxes—but be sure to check if your state has a different set of rules. 

We’re Ready to Help You Navigate the Upcoming Tax Season

It’s probably no surprise that our biggest piece of advice is to seek help from a professional accountant. Regardless of what industry you’re in, an accountant is one of the best investments you can make—especially when you’re just starting out. Make sure you’re ready for tax season with Banks, Finley, White & Co. Contact us today to get started with an accountant who specializes in small businesses!