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Filing Business Taxes: A Business Tax Preparation Checklist

7 Tasks Before You File Business Income Taxes


Start with this checklist before you begin preparing your business tax return. It will help you minimize mistakes that could delay a refund or increase your chances of being audited. Other parts of this article can help you make sure you minimize taxes (legally, of course) and maximize your tax refund.

1. Are you using the correct business income tax form?

Be sure you are using the correct return for your type of business:

2. Have you checked for tax changes?

Be sure to check for tax changes before you complete your return. Tax changes in 2014 include:

  • Changes in the business mileage rates for 2014 business driving
  • Increase in the maximum amount of income (including self-employment income)subject to Social Security tax; the maximum Social Security taxable income for the tax year.
  • You should also check on changes in accelerated depreciation on purchase of assets in the tax year, including section 179 and bonus depreciation allowances.
  • And check to see if your business is eligible for tax credits, like the Work Opportunity Tax Credit or the Small Business Health Care Tax Credit.


3. Are you taking all legitimate tax deductions?

Review "Tax Deductions from A to Z" and the commonly missed deductions articles to be sure you haven't missed anything.

In particular, pay attention to Business Startup Costs
You may be eligible to deduct some of your business startup costs up to $5,000 and organizational costs up to $5,000 (for expenses after October 22, 2004). If your startup or organizational costs exceeded $50,000, your deduction may be limited.

4. Do you know how to file electronically?

Filing online (or E-filing) saves you time, it's painless, the IRS says it's 99% accurate, and it speeds any return you will receive. You can use the federal E-File service through a tax preparer or through tax software.

Large corporations must file their corporate tax returns electronically. Here is the IRS requirement:

Corporations that have assets of $10 million or more and file at least 250 returns annually are required to electronically file their Forms 1120 and 1120S for tax years ending on or after December 31, 2006.


To file electronically, you will need to use one the IRS has approved e-file providers. Choose a provider and follow the directions on their website. The IRS also has several payment options (debit or credit card and other), depending upon the form you are filing.

5. Is your return free of tax audit "red flags?"

Review this article to find out what issues the IRS looks for in a business that can trigger an audit, including:
  • Hobby businesses
  • Hiring your children
  • Paying reasonable salaries
  • Home business deductions
  • Records to support business deductions.

6. Finally, have you checked for errors?

Check for errors before you hit that "send" button or you put your return in the mail. Errors and omissions can delay your return and cause your return to be rejected. Common errors include:

  • Incorrect or missing social security numbers or employer ID numbers
  • Incorrect tax entered based on taxable income and filing status
  • Computation errors in figuring the taxable income, withholding and estimated tax payments, and common credits and deductions
  • Withholding and estimated tax payments entered on the wrong line, and
  • Math Errors. Both addition and subtraction.
In addition to the article above, review this IRS list of common filing errors in Tax Topic 303.


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