Launching your own business is an exciting adventure that lets you work for yourself. However, it also brings new challenges, especially when it comes to business tax preparation and filing. If you’re starting a company or getting a freelance career off the ground, here are answers to some common tax questions you may have.

A Guide to Common Business Tax Preparation Questions

Are all business expenses deductible?

Most expenses considered “ordinary and necessary” in your industry are fully deductible. For instance, you may deduct 100% of your advertising and material costs, payroll expenses, and rent paid for your location. Until the end of 2022, you may also deduct the entire cost of business meals with clients, as long as you or an employee is present.

How often should I pay taxes?

Your tax schedule depends on your location and the type of taxes you owe. Most businesses are expected to pay estimated income taxes on a quarterly basis due by the 15th of the month after the end of the quarter. Employment taxes are typically due either on a monthly or biweekly basis, while other taxes may be paid annually.

In Arizona, businesses are required to report income taxes monthly, and a tax return should be filed at the end of the year. These payments should include local taxes owed to your city or county as well.

Do I have to withhold taxes from my employees’ pay?

Businesses with regular employees are required to withhold income tax, Social Security, and Medicare contributions from their employees’ paychecks. However, many small businesses use independent contractors, who are responsible for their own tax payments.

The IRS only considers workers contractors if they have control over how something is done. If you have control over the process, methods, and workers’ schedules, the IRS most likely classifies them as employees.

How should I prepare to file business taxes?

Business tax preparation is usually much more complex than filling out your personal returns. While setting up your business, keep receipts for all expenses and records of any payments received. Separating your personal and business finances into separate accounts is an essential step for simplifying your records and avoiding trouble with the IRS later.

Determining when specific tax payments are due can be confusing, so consult with a professional early in your planning stages. They can help set up a payment schedule and calculate your tax amounts so you’re not surprised by massive penalties at the end of the year.

Whether you’re just getting a new company off the ground or have been running for years, JSR Tax Services and Small Business Accounting will deliver the detailed business tax preparation services you need. They have nearly a decade of experience serving entrepreneurs throughout the Phoenix area and are committed to building strong relationships with each of their clients. To get started on your business tax preparation, visit their website or call (480) 808-3838.