WHAT IS A BUSINESS TAX RETURN?

A business tax return is basically an income tax return. The return is a statement of income and expenditure of the business. Also, any tax to be paid on the profits made by you is declared in this return. The return also contains details of the assets and liabilities held by the business. Items like fixed assets, debtors and creditors of business, loans taken and loans were given are declared here.

WHO HAS TO FILE A BUSINESS TAX RETURN?

Filing of return mainly depends on the type of business structure. For example:

If you are a sole proprietor your business income and your other personal income like salary, income from house property and interest income have to be stated on the same return.

If your total income before deductions is above the basic taxable limit you need to compulsorily file your income tax return irrespective of profit or loss in your business.

For companies, firms and Limited Liability Partnership (LLP) a business tax return has to be filed irrespective of profit or loss. Even if there are no operations undertaken, a return has to be filed.

Companies, firms, and LLPs are taxed at a rate of 30%.

THINGS NEEDS TO FILE SMALL BUSINESS TAXES

Take control of your small business taxes by gathering these documents and information in advance. With just a little bit of preparation, you can help your tax professional save you time and money when you file this tax season. Ready to get started? Start by gathering these 12 documents needed to file:

1. Your EIN Or SSN

First things first: You will need to furnish your tax accountant with basic personal information including your legal name, current address, and social security number. The easiest way to provide this information is to bring your social security card to your tax appointment.

2. Your Previous Year’s Tax Return

Make sure to come with your previous year’s tax return. This

1. helps the tax accountant get a better understanding of your business, and
2. gives quick information about the deductions your company has (or hasn’t) been taking.

3. Your Yearly Financial Business Reports

Your accountant will need copies of your basic financial reports for the year. These generally include:

The profit and loss report shows your business’s overall profit (or loss) for the year, while the balance sheet displays your company’s assets and liabilities. The statement of cash flows shows all transactions affecting your business’s cash account.

4. The Appropriate Business Tax Forms

The tax forms your business is required to fill out depends entirely on your business type.

5. Your Business Asset Information

Your accountant will need to know about any assets you’ve bought, sold, or depreciated during the last year. Bring any receipts, documents, or reports related to your assets and fixed assets.

6. Any Business Loan Information

You’ll also need information on business loans. If you’ve acquired a new loan in the last year, bring the loan agreement with you. Also, bring records of any loan payments and/or accrued interest. This will ensure that your accountant is up to date on your company’s total assets and liabilities.

Many small business owners took advantage of loan and grant programs including the Paycheck Protection Program (PPP), the Economic Injury Disaster Loan (EIDL), and the EIDL Advance.

Through the PPP program, eligible businesses received loans that could be forgiven if used for qualifying expenses, including payroll expenses, utilities, and rent payments. Whether your loan was forgiven or not, these funds are not counted toward the taxable income of your business.

The good news is that you can claim deductions for any eligible business expenses paid for using your PPP funds. It doesn’t matter if your loan was forgiven or not — all qualifying small business expenses paid for with these funds can be written off, so make sure to bring receipts, invoices, and other documentation to your accountant to claim these deductions and lower your tax liability.

If you received an EIDL or EIDL Grant, these funds will not be added to your taxable income. Qualifying business expenses paid using your EIDL or EIDL Grant can be written off on your tax return to lower your tax liability. So, again, make sure that you gather all applicable documentation — receipts, paid invoices, accounting records — so your accountant can enter these deductions.

7. Your Income Records

To verify the income amount on your profit and loss statement, you will need to provide your accountant with income records.

8. Your Business Expense Records

In order for your tax accountant to verify your company’s expenses and find you the correct deductions, you’ll need to bring several types of expense records as well, including:

Be sure to keep these expense records, especially your companies business receipts, well-organized. Not only will your accountant thank you for not handing them a shoebox of receipts, but your wallet will also thank you, too.

The more time your accountant has to spend on your tax return, the more money you pay, so make everything as seamless and easy for them as possible.

9. All Deductible Expense Information

Some business expenses require more than just receipts. So if you’re planning on claiming any of the following deductions, make sure you bring the proper information to your accountant:

Make sure you are taking all of the small business tax deductions your business qualifies for by checking our complete business expenses deduction list. If you are worried that taking a deduction may result in an audit, rest assured, taking the tax deductions you qualify for is a great way to save on your tax return, but read our top tips on preventing a tax audit to be safe.

10. Your Business’s Payroll Data

Your accountant or tax professional will also need your payroll data from the year. Bring copies of your employee’s payroll details. Also, gather health insurance records (as these can count as a business deduction) and any information regarding bonuses.

11. Your Opening & Ending Inventory Total For The Year

Several tax forms require a COGS (Cost of Goods Sold) closing balance for the year. You should already have taken an opening balance of your inventory at the beginning of the year. Now do another inventory count and bring the results to your accountant so they can properly fill out your tax return.

12. Any Stock & Bond Information

Bring information related to all stocks and bonds your business has attained or sold during the year. You’ll also need a record of any owner’s investments made into or withdrawn from the company during the year.

Keep Your Business Information Organized

One of the biggest ways you can save your business money is by being organized. Having all of your tax information together only goes so far. Your accountant or tax preparer needs to be able to find and understand your records with ease. Organizing your business information can make or break a tax appointment.

All businesses operating in India are required to file income tax return each year. In addition to filing income tax return, a business may also be required to file TDS return and pay advance tax to stay compliant under the Income Tax Act. CVBAY Account Services is India’s tax services platform offering a range of services like incorporation, GST return filing, income tax filing and more. CVBAY Account Services can help file income tax return for your business and ensure it remains compliant under the Income Tax Act and Rules. The average time taken to file an income tax return for your business is 3 to 5 working days. Get a free consultation on business tax return filing by scheduling an appointment with an CVBAY Account Services Professionals.

CVBAY ACCOUNT SERVICES works round the clock, 24 hours x 7 days x 365 days. When you collaborate with us, we will deliver the desired output in real time as well as within a specified turnaround time.

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