Tax Season for Online Sellers: How Can You Prepare for It?
Paying Taxes in eCommerce Businesses
The end of January marks the start of tax season, and it’s important to be prepared. Just like any physical retailer, online sellers must be ready to file their tax returns. Paying your taxes is extremely important, because your business could run into trouble with the IRS if you fail to do so, and that could lead to serious long-term damage. Within this guide, you will find everything you need to know about filing taxes.
Know Your Sales Tax Requirements
First and foremost, you need to read up on the specific tax requirements that your organization needs to follow. The most important rule regarding online sales taxes is that you must collect them from your buyers if you have some kind of physical location, or “nexus.” This can be anything from a warehouse to an office that you operate your business from.
Keep in mind that sales taxes are different among certain states, so you must be careful if you collect taxes from several states. Always be mindful of each state’s tax laws as well, since they can vary slightly. Also keep in mind that while most physical products have to be taxed, certain items cannot be taxed in specific states.
Seek outside help if you need help confirming this information.
Know the Tax Deadlines
One of the most important parts of tax season is knowing when specific payments are due. Typically, taxpayers have to make their final payments by the middle of April, which is when Tax Day is. April 15th is Tax Day for 2019, so keep this date in mind so you do not forget about it. There are also a couple of other dates that you should be aware of. Forms 1099 and W-2 need to be filed by the end of January, and any partnership returns have to be sent in by March 15th. Make a note of these dates so you do not forget about them.
Organize Your Financial Information
To avoid major issues, you need to keep track of your income and your expenses so your financial records are up-to-date. It does not matter if you do your bookkeeping online or offline; you need to make sure your books are up-to-date with the correct financial information. If any of the information you present is false or out of date you could get into serious trouble with the IRS.
It is also important to keep track of all your receipts, since they detail any expenses your company has paid throughout the year. You can make it easier to keep track of these by scanning them onto websites like Evernote. This will let you have a record of them online, so you do not have to worry if you ever misplace one of your receipts.
With this information, you can identify your net income and figure out how much money you need to pay.
Know You Can File Extensions
It is important to know that you can file for a tax extension if you do not have enough time to meet the deadline for your tax payments. The process is simple, and by taking advantage of it you can get some extra time in case you are being pulled away from your taxes due to other priorities.
To file a tax extension, you must file a form that corresponds with the type or organization you run. If the form has been approved, you can get up to six extra months to send in your tax returns. Only use this if you are absolutely unable to finish your tax returns in time, and if you choose to use it, make sure you do not miss the new deadline.
Do Not Be Afraid To Seek Outside Help
If you are having trouble with your taxes, do not be afraid to seek help from a professional accountant. Even if you know how to file them, having an accountant can help free up time so you can work on other important tasks. Accountants around the country specialize in several different businesses, and they can help you file your taxes properly and keep the IRS off your back.
When you are looking for an accountant, make sure you hire one that understands the type of business you work in. You can also consult with professional tax advisors if you need help with a specific topic.
Looking for other tips to help you with tax season?