11 Best Practices For Efficient Tax Filing

Filing Federal Income Tax Return for businesses has various approaches for doing it, respective to the way how businesses can be run as a sole proprietorship or the application of legal entities such as LLC or corporation. Varied entities require critical tax forms on which they can report their business income and expenses. Irrespective of the tax forms they use, the calculation of taxable business incomes is somewhat similar.   

Analyzation and formulation of appropriate business plans are critical for ensuring business continuity, with tax benefits to succession planning while being in check with both attorneys and accountants. Skillful organization of tax records makes filing business taxes much easier and faster. This can cut down the tension by getting an appropriate collection of details. With a prior collection of information, well ahead of time, businesses can improve the odds of filing a complete and accurate return. Being compliant with all related laws and regulations, periodic checking of taxes off a checklist, businesses can prepare and plan towards success.    

Incorporating well-experienced and qualified professionals is necessary for completing and submitting tax returns. Skillful organization of receipts, forms, and other documents well before tax time, tax preparation efforts ample time. Outsourcing preparation of tax returns and working in advance is always better. Rounding up receipts and checking all received forms is also critical. Inferring from last year’s tax returns will also be a guide for making sure missing of any important information. OURS GLOBAL’s Tax Preparation Services commits to the preparation of tax returns of business organizations attending to GST calculations and returns, individual, partnership, corporation tax preparation, business, individual & GST/HST filings, and computation & filing of income tax & value-added taxes. 

Process of Tax Preparation

Following are the step-by-step procedure for tax preparation:

• Scanned Documents:

Scanning of tax documents and entering of corresponding data into the tax software.

• Audit:

After entering relevant data into the software, later auditing tax returns for checking all information for precise entering to avoid wrong computation.

• Review:

Reviewing for issues as per requirement.

• Final Submission:

Reviewing and finalizing, followed by correction and updating to be sent for filing with the relevant authority. 

Following are the Eleven Best Practices For Efficient Tax Filing: 

1.Organization of Tax Paperwork

Avoid last-minute rushes and connect with tax professionals for directing them to handle proper categorization of various documentation. Having key documentation to start with proper proof of identity. While preparing taxes on behalf of a business, including an employer identification number or tax ID is necessary. With a proper understanding of gross receipts from sales or services, sales records, returns, business bank account interest, inventory, amount of beginning inventory, amount of inventory, items removed, required materials & supplies, the tax preparation efforts can include all expenses that qualify for certain deductions & credits for cutting down tax liability. 

2.Taking Proper Advantage of Up-to-date Tax Laws

With newer laws coming in influencing reductions and reforms to the tax code, that impact the businesses, the IRS also gives proper platforms for the implementation of such laws without many complexities. Varied business niches like sole proprietors, partnerships, S corporations, and their shareholders qualify for business income deduction without including employee wages, capital gains, interest, and dividend income. With tax incomes between $315,000 for joint returns and $157,500 for other taxpayers, businesses can take advantage by 20 percent of their qualified business income, 20 percent of qualified real estate investment trust dividends and qualified publicly traded partnership income, or 20 percent of taxable income minus net capital gain. Working side by side with a well-experienced tax professional or outsourcing your tax filing or preparation is required for taking advantage of the credit.

3.Proper Acknowledgement of Qualified Deductions & Credits

Knowing well about tax deductions and credits helps in the filing process by taking advantage of deductions reducing the taxable income by taking advantage of credit reducing the total tax bill. With several business-tax credits available and can be applied to particular industries, acknowledgment of the same can pave way for potential deductions or credits.

4.Itemizing Business Expenses

With detailed, itemized, and categorized expense information, businesses can save time and avoid hassles before the tax day. Working closely with the bookkeeping and accounting professionals or outsourcing these requirements to expert service providers will help businesses in claiming optimum benefit from their expenses. The business explainer platform under IRS also helps for compiling all niches of claimed expenses.

5.Being Up to Date With Tax Issues

Taking out loans for meeting tax benefit liabilities, businesses must have stringent attention to the guidelines of payment of those loans. If a particular state goes not repaying the loan, there will always be a reduction in the credit rate. States such as Arizona, Arkansas, California, Connecticut, Delaware, Indiana, Kentucky, New York, North Carolina, Ohio, Rhode Island, and South Carolina, as well as the Virgin Islands, face such troubles. Preparing state returns in addition to the federal return with proper awareness of all complexities and variation in state requirements must be given the same attention as the IRS rules.

6.Request of Extension

Requesting an extension from IRS will give you few additional six months to file taxes. With the use of the 7004 form, businesses can request an extension taking full advantage of taking the additional time. Exuberant clarity is needed on tax issues while maintaining compliance with regulations or taking too much time in getting the appropriate framework. With an extension, businesses can get a grace period for filing final returns but must still have to pay for the taxes that they owe. Underpaying by filing an extension minimizes the amount of money required for submitting when it’s time to file the return. 

7.Succession Planning 

In unexpected crises and accidents, businesses must analyze and formulate plans for the required actions for ensuring business continuity. Discussing with attorneys and accountants the tax benefits with succession planning. Skillful organization of tax records makes filing business taxes much easier and faster. With succession planning, stress can be cut down and get all details together. Minimizing stress from succession planning to the upcoming year with proper collection of details, businesses can greatly improve the odds of filing a complete and accurate return. Helping to be compliant with the law, business owners can be well aware of the preparation and planning ahead.   

8.Calculation of Projected Payroll Taxes

Keeping up-to-date and calculated payroll taxes just like expenses and deductions throughout the year side by side with the estimated tax payment schedule can enable businesses of an IRS installment plan. Owing to less than twenty-five thousand dollars in combined tax, penalties, interest, and filed all required returns makes a business eligible for the same. 

9.Prevention of Disaster Losses

For businesses that suffer from the federally declared disaster area, the loss can generally be itemized as itemized deduction over tax returns. Businesses can no longer deduct with the cases of loss due to theft or disaster with federally declared disaster. The loss of the amount can deduct by payment received. Such losses will be deducted on Schedule A of Form 1040 for the year from which they have occurred. These can also be taken before the disaster if applicable. In case of greater casualty loss much larger than your income and if the casualty loss is larger than income, check for qualifications of net operating loss. 

10.Keeping a Copy of Last Year’s Return

Businesses must always keep all details of their last year and the previous year’s financial information. Following are the examples of some items that must be overlooked: 

• Interest and dividends. Last year’s return should indicate banks mutual funds or financial institutions that have sent your businesses with 1099 forms. Incorporating that list will ensure receiving of 1099s from them again to the present year.
• Charitable deductions. Small gifts to organizations that even got no acknowledgment are also turn out to be benefiting. Deducting such contributions in events of canceled checks or other proofs. Checking last year’s list of organizations that have donated to see gifts forwarded to them. 

11. Checking Expiry Status of ITIN’s

Individual Taxpayer Identification Number (ITIN) gets expired if not used on a federal tax return every three years. They must be renewed with expiry and to do this it requires applying for renewal with a W-7 Form and required documentation. Filing tax returns without the renewal of ITIN or renewing the application will lead to an adjustment to returns as filed. 

Processing of returns with no issue of returns and any exemptions or credits claimed over the return will be denied. Owed taxes are as a result of such adjustments, interests, and penalties on due. Businesses that commit to their taxes or hiring someone else on handling it, will save considerable time if follow all the best practices that are suggested above. Initiating these practices much earlier the whole tax filing process will go much smoother. Choosing to hire an ideal service provider will ensure efficient preparation of tax filing, get referrals, verify credentials, making sure of IRS Preparer Tax Identification Number (PTIN), and eliminate other red flags. OURS GLOBAL’s Tax Preparation Services ensure businesses enjoy peace of mind with error-free tax filing and as positive returns as possible. Businesses who want error-free tax filing and preceding processes and ping us right away!