Small business tax planning is an important requirement of small business concerns. Tax planning should be done on a compulsory basis in order to avoid problems in the future. Tax planning primarily involves a clear knowledge of the basics of taxation and the way in which tax returns have to be filed.
The first stage of tax planning is to get hold of an Employer Identification Number or which is shortly known as EIN. The business of the tax payer is identified through this EIN. EIN is the federal tax identification number. In many states, small business owners may have to apply for a local tax number. An application for an EIN can be made mail, fax or calling the state Tele-TIN phone number.
In order to file for a small business tax, form SS-4 needs to be filled up. The request for tax filing has to be made a month in advance of making the deposit or return. In order to get the correct information on taxes, one can visit the IRS website.
This would give them a clear idea of the procedure of tax payments which would help in chalking out a plan for small business tax payment. Small business tax strategies also involve the knowledge that there are a wide variety of taxes depending on the type of business.
Taxes may be local, federal, state or specialized. In order to pay business tax in a hassle free manner, the tax records must be updated. Unnecessary information must be done away with. The receipts are the expenses that the business concern has incurred in a year and hence they must be kept intact. They are very important during the time of payment of taxes.
One has to incorporate oneself in order to reduce the tax rates payable. It would be further profitable in terms of tax payments if the small business owner is running a home based business. The documentation of expenses has to be made in a systematic manner in order to avoid problems during tax audits. The tax returns and the tax dues should also be paid in time and small business tax planning facilitates this.
Last Updated on : 29th July 2013