How To Prepare and File Taxes for the Self Employed

IRS application form

Filing the tax papers and forms for the IRS can be daunting if you are self employed. Large businesses and corporations usually have departments for finance that will handle the tax aspect of the business. If you are self employed, however, you will need to run your business and manage the tax papers all by yourself. Here’s how you can easily prepare the tax forms.

Organize. The most important thing that you should keep in mind is organization. Even in the world of large companies and corporations, organizing tax data is bulk of what the finance departments in these companies do. The easiest way to do this is to create a filing system in your home office or your business office; so that you can easily place the files in an appropriate filing folder each time you get a new file which will need to be included in your taxes. Set a time each month to fill up the papers too, so that you will not need to rush filling up the tax forms when the due dates and deadlines for submission appear.

Research on deductions. One of the reasons why plenty of self employed individuals owe the IRS money is because they do not read up and conduct research on the deductions that the IRS actually provides for the self employed. Because you are self employed and because you are managing the business all by yourself, there are actually a number of deductions that you can use to minimize your taxes and make tax filing easier. Ask a finance adviser about these deductions so that you can utilize them to your advantage, or use resources that you have at your disposal to do research yourself, such as the Internet.

IRS Form 1040. You can use the IRS Form 1040 to create the Net Profit and Net Loss statement for the IRS. In the statement, you will get an estimation of how much you have earned in the particular tax season that you are in, or how much you have lost in your business. The form will ask you to fill in details such as the expenses that your business has incurred, the sales and income that your business has incurred, and miscellaneous other expenses such as maintenance for the office, insurance, et cetera.

IRS Form 8829. Sometimes, the best way to minimize expenses if you are self employed is if you use your own home as your office. If this is the case, you should fill up the IRS form 8829. In this form, you will need to indicate the extent of your home that you use as the office, which is measured in the square feet. You will also need to show the receipts and records that you have accumulated throughout the year.

Finally, make sure that you update your files and your IRS tax forms frequently so that the forms and the IRS tasks do not pile up on your table. By being organized, researching on the tax laws, and updating your files, you can easily manage filing and preparing tax forms for the IRS.


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