As a small business owner, you’re constantly putting in the work to ensure your products, services, and employees are coming out on top.
But it’s extremely important to do the same for your finances, as well. Proper documentation and tax filing are key to keeping your business operational and profitable. As you begin to prep for your Colorado small business taxes, we’ve created the following guide as a helpful resource.
Let’s jump in!
Beginner’s Guide to Filing Colorado Small Business Taxes
Determine Which Type of Tax Return Is Needed
Not every tax return (or form) is the same, and it’s important that you file correctly based on your business type.
Here are the business categories (and their proper processes):
As a C Corporation, you’re required to submit IRS Form 1120.
With an S Corporation, you’ll actually register your business as a C Corporation or LLC to begin with, then file IRS Form 2553 to elect S Corporation taxation. Keep in mind, your business must meet certain requirements to allow for this.
Limited Liability Partnership (LLP)
If you’re running an LLP, then your filing process will be two-pronged. To provide record of income, gains, losses, and deductions, you’ll file a Schedule K-1 (IRS Form 1065). Next, you’ll need your partners to file IRS Form 1040 before paying self-employment taxes.
Limited Liability Company (LLC)
Limited Liability Companies should file IRS Form 1120 if they are categorized as a corporation that follows normal corporate tax rules.
Single-Member LLC/Sole Proprietor
There are two specific forms involved for Single-Member LLCs and Sole Proprietors – the Schedule C and the IRS Form 1040.
There are certain elements to each form that may require professional assistance, so we recommend involving a professional accountant sooner rather than later.
Select a Filing Method for Your Colorado Small Business Taxes
Just because you know which form to file, doesn’t mean you’ve got all the information to be successful. The natural, next step would be determining how you want to file.
E-file/Online VS Mail-In
While this is definitely up to you, the e-file option is better in time-sensitive situations, as it is often processed much faster. Filing your Colorado small business taxes by snail mail may take 6-8 weeks to process, but filing online has been known to take only 2-3 weeks.
If you partner with a professional accountant from Yeater & Associates, they can file through the online system or mail, as long as time allows.
Gather Your Documents
This part might seem redundant, but you’d be surprised at how much information you need to gather in order to complete your corresponding tax forms. Before you can do anything, you’ll need to pull the following:
- Financial statements
- Bank statements
- Credit card statements
- Payroll records
When it comes to tax season, proper documentation is key to keeping things quick and easy. Sure, filing your Colorado small business taxes may not be your favorite activity, but we don’t want it to become of source of stress.
If reading that list puts you in panic mode, it might be time to invest in a financial tool to keep track of these documents throughout the year. There are tons of free and inexpensive programs out there to help, and any accountant or bookkeeper could get you set up.
Apply Relevant Tax Credits & Deductions
You do not want to skip this step, as it’s the one that will save you money in the long run! Between tax credits and deductions, your business may not need to pay as much in taxes.
These are not, however, automatically applied to your business tax forms. If you want to benefit from either of these, you’ll need to identify what you qualify for and follow the appropriate process.
One of the biggest benefits to hiring a professional to do your taxes is their knowledge in this area. They can help you find ways to save money & incorporate them into your tax filing process.
Need Additional Help with Your Colorado Small Business Taxes?
That’s okay! Taxes can be time consuming and headache-inducing, and sometimes you just don’t want to deal with any of it. That’s where we come in.
Yeater & Associates has been helping people file their Colorado small business taxes for years, and we’re happy to continue doing so. Our team of professionals would love to set up a consultation and discuss your needs before the tax deadline. Get in touch today!