You went to the bank to get a loan for the business, and one of the documents required on the checklist for the application is your business taxes. At that point, you don’t have a choice. You have to get them done. There are other reasons, though, to make sure you have your business taxes prepared annually.
When will I need my business taxes?
- You can use losses from your business taxes – If you are an LLC or SCorp, you can carry over losses from the business onto your personal taxes. This can help to reduce the tax liability you face personally and, in some cases, might even result in a refund.
- Applying for grants – Some grants may require that you provide a copy of your business tax returns, and therefore, having it handy can put you one step closer to getting much-needed funds.
- Business expenses are tax deductible – Having a business can actually be very helpful in that you can claim several expenses you would not ordinarily be able to claim on your personal taxes. These expenses include mileage on your vehicle, assuming you use it for business purposes, cell phone expenses, assuming you use your cell phone to make business calls, home internet expenses, assuming you work from home and use the internet to conduct business, and food expenses, assuming some of your meals are business-related. The best thing to do, however, is to consult an accountant to determine what types of expenses can be claimed as business expenses and plan accordingly to maximize the benefit of this.
- Self-employed persons need business taxes – Many self-employed people do not have a paystub to show potential lenders. When applying for personal loans, therefore, like a home loan or car loan, they would need to provide something else to verify income. That’s where business taxes can come in handy. They can sometimes be used in lieu of a W2 or paystub.
What will I need to have my business taxes prepared?
- Profit and loss statement – This is the summary of the revenue generated and expenses incurred by the business. This can be obtained from your bookkeeper or the bookkeeping software you use.
- Balance sheet – This is a summary of the assets and debt and equity the business has. Of particular importance are assets that can depreciate since depreciation is a tax-deductible expense.
Tax returns are one of the main documents that are the ticket for a lot of things that you will need to do financially with your business. Therefore, it is very important to make sure that they are up to date and prepared properly.