Speaker 1: For small business owners, there are only two things certain in life, taxes and the fact that thinking about taxes can be so overwhelming you end up procrastinating letting your bookkeeping fall behind. We can't get rid of your taxes, but we can help you prep them. In this video, we're going to talk about how to prepare to file your business taxes in the U.S. We'll cover which financial records to gather, the proper tax forms to file, and then, best of all, how to claim your tax deductions. Obligatory awkward legal mention. This video is for informational purposes only and should not be relied upon as tax or legal advice. Everyone's tax situation is different, so contact your tax advisor if you need assistance. If your bookkeeping isn't in the best place right now and that shoebox under your bed is looking real intimidating, don't worry. This first step will go over how to get your books ready for tax time. A good start would be to gather your tax return from last year, if you filed one, your taxpayer identification number, such as employer identification number, if you have one for your business, and your social security number, important financial reports like your balance sheet and profit and loss statement, receipts, expenses, and invoices, and any tax information slips you have received. Having everything in one place will make your bookkeeping and tax filing easier. A great way to do this is with money management software like, oh, I don't know, got all your records on hand? Great. Now, you'll need to double check that all your income and expenses for the year are A, properly recorded and B, categorized or sorted appropriately in either assets, liabilities, equity, revenue, or expenses. If you haven't finished categorizing your transactions yet, or if none of that made any sense to you, don't worry. Check out our video in the description called How to Do Bookkeeping for Small Business Owners, which covers everything you need to know about getting your books organized for tax season. Buckle up, we're getting into taxes now. You'll need to prepare the appropriate tax forms for your business. Keep in mind that the type of tax forms you need will depend on your business's structure and unique situation. So, let's review your options. We'll start with LLCs, but if you've chosen to tax your LLC as a C-Corporation or an S-Corporation, stay tuned. The tax forms you'll need to fill out as a member of an LLC will depend on how many other members your LLC has and how you've opted to be taxed. The tax forms needed for single-member LLCs owned by an individual are actually the same as sole proprietorships, so you'll need to file Form 1040 along with Schedule C with your personal tax return. If you have two or more members, you'll file Form 1065 along with Schedule K-1, similar to a partnership. For sole proprietorships, you'll need to fill out Form 1040 and Schedule C, which gets attached to your personal tax return. In a partnership, each partner needs to submit Form 1065 along with Schedule K-1 for each partner, which is separate from their personal tax returns. If your business is a C-Corporation or chooses to be taxed as one, you'll need to file your corporate tax return, Form 1120, separately from your personal tax return. If your business is an S-Corporation or chooses to be taxed as an S-Corporation, you'll need Form 1120-S along with Schedule K-1 for each shareholder, which is submitted separately from your personal tax return. When it comes to paying federal taxes, nonprofits are usually exempt if they receive approval from the IRS. After approval, an annual information return, called Form 990, is required to make sure you still qualify for exempt status if all the money your business received from all sources exceeded $50,000 for the year. Smaller nonprofits may qualify to use a shorter and sweeter version called Form 990-EZ. Your nonprofit may need to file another form called Form 990-T and pay taxes if it earned at least $1,000 of unrelated business income during the year. Most nonprofits can use Form 990-N if their annual gross receipts are normally $50,000 or less. FYI, this particular form can only be submitted electronically. It is also referred to as an e-postcard by the IRS. According to the IRS, if you're a sole proprietor or partner of a partnership, you can't pay yourself a salary through payroll for a business that you own. So, in order to contribute to Social Security and Medicare, you need to pay self-employment tax on your individual return. To calculate what you owe in self-employment tax, complete Schedule SE and attach it to your individual return and Form 1040. Your location also affects the type of tax forms you'll need. For instance, you might need to pay state or local income tax where you reside or where your business earns income. If you have employees on payroll, you'll need to submit W-2 forms that report the wages and taxes withheld for each individual employee, along with a W-3 form that acts as a cover sheet that reports the combined total of employee wages and withheld taxes. You'll also need to file Form 940 annually, which reports the amount of federal unemployment tax an employer must pay, along with Form 941 quarterly, to submit payroll tax and withholding tax to the IRS. If you've paid any contractors $600 or more during the course of the year, you'll need to submit Form 1099-NEC. WAVE's payroll feature allows you to generate these forms, which comes in extra handy for tax season, if we do say so ourselves. You can lower your business's total taxable income by claiming tax-deductible expenses or tax credits on your return. These are expenses that your business incurs like startup and workspace costs, office supplies, and insurance fees. We did a whole video on tax deductions that you should definitely check out. But the big point to emphasize here is get your existing receipts organized, then make a habit of good record-keeping moving forward. Claiming tax deductions and credits can save you a lot of money, but they're often scrutinized by the IRS. Even innocent mistakes claiming improper deductions can lead to steep tax penalties, so we highly recommend consulting a tax pro if you need help. Using good money management software to help keep track can be a tremendous benefit here as well. That's it. Congrats on making it to the end of a video about taxes. It might not be as exciting as the show you're binge-watching, but I promise it'll be worth your time in the end, unlike that awful season finale. Now that you have the right forms and records on hand, you're ready to start the filing process. How do you start the filing process, you ask? Well, a timed question, because the next and final video in this series will cover how to actually file your U.S. business taxes. And if you want to learn more about how WAVE's money management tools can help you get and stay ready for tax season, visit our website in the description below.