Tax filing tips for home based business owners and the self-employed

As the end of the tax year grows close, we all begin to turn our thoughts towards tax season. Whether you run a home-based business or are self-employed, there are a number of considerations you have that those who are W-2 employees do not have.

If you have employees your first thought must be to ensure that you have properly filed tax forms for each of them. Make sure you have W9 forms on file for each person whom you paid more than $600 and that you properly issue 1099 forms before year end. These forms can be ordered online from the Internal Revenue Service website.

For those who are home-based business owners and are self-employed you will want to establish what tax forms you must file for your personal tax liabilities as well as those for your company. The forms will vary depending on whether you are running an S Corporation, a C Corporation, a Limited Liability Corporation or you are simply running a "DBA" (Doing Business As). Each one has their own unique characteristics and are handled differently at tax time. Let's take a look at the tax tips that will help you the most:

• Expenses - No matter how careful you have been all year long, you are liable to have misplaced one or more receipts. If you have been particularly careful about filing them this is now the time to bring them out and sort them. Receipts should be carefully sorted to represent each category of expense (a) utilities, (b) rent/lease of property, (c) rent/lease of equipment, (d) equipment purchases, (e) donations, (f) taxes paid, and so on. This might be a good time to calculate each category in a spreadsheet so that you have your totals readily available.
• Income - Many home based and self employed people have multiple income streams. If this describes you, make sure you do not overlook any source of income. Residual income from articles, interest income, income from such sources as Google AdSense and other forms of income could ultimately result in your being audited because you have forgotten some minor amount of income. Do not allow yourself to be penalized because you failed to report something.
• Investments - Make a list of your investments for the year. This includes stocks, bonds, IRA funds, SEP Plans. Be prepared to determine how much you gained or lost on all transactions that might have taken place on all investments. These will also have to be reported to the IRS. Most times you will receive 1099 forms for this but make sure that your records match what you are receiving.

One you have gathered all of this information into one location and done your sorting, you should then look up the forms that you will be required to file. All forms for business can be found on the IRS website in their own categories. Tax time does not have to mean stress time, it merely means that you will need to be prepared with accurate tax filing tips. Make sure that you have done all the research you need for filing the proper taxes for your home-based business.