Doing Your Home Business Taxes – There is Still Time to be Early

If you plan on getting a refund, you may have already completed your income tax return.  If not, I have some suggestions to help you get through this process with minimal pain:

Gather Business Information. This is probably the most difficult part, if you haven’t been keeping track.  When I did my business taxes, it took me weeks to figure everything out, because I didn’t do all the accounting as I was going along last year.

The best way to do your 2008 books is to shut the doors, turn off phone and email, and just git-er-done.  Then when you emerge, vowing to do better next year, you’ll be ready to prepare those taxes.

Figure out which form to use. The tax form you use for your business taxes depends on the type of business.  Many home business owners file their business taxes on a Schedule C as sole proprietors.  If you are a single-member LLC, you would also use a Schedule C.  If you file taxes as a corporation, Subchapter S corporation, or partnership, there are other forms you need to use.  Check with your CPA or tax adviser about the correct form.  H&R Block is the only tax preparation service I know of that does business taxes as well as personal taxes. March 15 was the due date for filing returns for corporations with December 31 year end dates, so if you haven’t filed your corporate taxes, you need to prepare a request for an extension and pay the tax due.

Determine who should do your taxes. If you have a very simple business, you may be able to use tax preparation software. TurboTax Home & Business or TaxCut Home & Business will both do well at leading you through the interview process for a Schedule C.  You can also e-file your return (federal and most states) with either of these programs. For more complicated businesses, as well as corporations and partnerships, I’d suggest a tax preparer.  I’ve tried using the tax prep software programs for corporate taxes and I found myself lost quickly.

Filing Options. I filed in early March (my CPA e-filed my returns), and I already have my state and federal refunds sitting in my bank account.  E-filing, as far as I’m concerned, is the way to go, especially if you are getting a refund.  The IRS encourages e-filing for both personal and business taxes.  Whether you do your return yourself, you use tax software or you have your tax preparer file for you, e-filing can get your refund to you much faster.

In short, if you haven’t filed yet, it’s time to get going. April 15 is right around the corner.

Image: Zevotron @Flickr