Friday, February 27, 2009
Filing Taxes for your Startup - 1120, 1099, 940, 941, etc.
One of the downfalls of incorporating is having to actually follow all the tax codes and IRS guidelines. Fortunately, with no revenue, we get to file a few less forms. But since we paid contractors this year, we had to file some additional forms from last year. So I guess it all balances out.
Since I'm not really detail oriented. This menial task takes me quite a while. Getting social security numbers, addresses, federal tax ID's, etc. from all of your contractors takes time. I recommend doing this well in advance of the deadline (which passed a few weeks ago). It's also a pain in the butt to figure out what you actually have to file. I'm still not entirely sure! And you get dinged for late files... up to $100,000 if you're a small business. Nice.
The best way to accomplish this task is to efile. Find a good provider and fill out the forms online. One such provider that has been a pleasure to work with, is PayCycle. The 1099's were a breeze (for paying contractors). They cost about 39.00 for up to 50 forms...along with efiling. They also have a host of payroll services. But we have no use for that yet.
Other forms to note are 940's (annual unemployment tax return), 941's (quarterly federal tax return), and 944's (annual federal tax return). If you're e-filing, you need to also submit an 8453c form (income tax declaration for e-filing) with your 1120 (US Corp. income tax return - for corporations). If you have payroll, there are more forms - like W2's. These probably aren't all of them...but it should give you a good start.
If I get dinged for missing forms, I'll be sure to let you know.
UPDATE: I just spoke to a colleague who reminded me that for missing things like commas, you can get fined. They'll fine you for anything. So my recommendation is to file online! The error handling takes care fo that stuff.