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[S603]Small Business Tax Return

by Wayne M Davies, Way

Mistake #1: Forgetting to sign the return. If you omit your signature, the IRS will not process the return. Instead, they'll send it back. And if you are married filing jointly, both spouses must sign, and if one spouse signs but the other doesn't, the IRS will treat such a return as invalid and return it. The solution: e-file your return and the signature issue disappears.

Mistake #2: Math errors. Simple calculation errors are also quite common. With the proliferation of tax prep computer software programs, you would think this problem would have gone away by now. But plenty of folks still do their return the old-fashion way (i.e. via pencil and paper), so if your one of those types, what can I say? I respect you, but must insist you consider spending a few dollars this year on to automate the process. Not only will you eliminate the likelihood of a math error, but you'll save time and lots of it. Instead of spending 5, 10, 15 hours or more on your return, using a software program will cut that down to 2 or 3 hours.

Mistake #3: Missing forms. Perhaps this blunder is the most understandable of the three. After all, who isn't overwhelmed by the mind-boggling number of forms you have to prepare for the typical small business income tax return?

The problem here has to do with the omission of the forms that support the main income tax form for your particular type of enterprise. What do I mean by "the main forms"? Sole proprietors file Schedule C; regular corporations use Form 1120 and S corporations use Form 1120S; partnerships prepare Form 1065. Those forms are not the issue. It's all the other forms that feed numbers into those main forms that folks tend to forget. Let's call these forms the "supporting forms."

Here's a quick review of the most common supporting forms:

Form 4562 is used to report depreciation expense, amortization expense and the Section 179 expense deduction. So if you purchase fixed assets such as computer equipment or office furniture, you must show the details of these purchases on Form 4562. This form is used by business entities of all types.

For sole proprietors, two other common supporting forms are Schedule SE and Form 8829. Schedule SE is use to calculate the hated self-employment tax and Form 8829 is for the home office deduction.

The point here is this: if you report an amount for depreciation expense or the Section 179 deduction for newly purchased equipment on Schedule C Line 13, then you better include Form 4562 with your return. If you take the home office deduction on line 30, be sure to include Form 8829. And if you have a profit on Schedule C Line 31 of at least $400, then you must also prepare Schedule SE. Using a software program will eliminate the possibility of forgetting these supporting forms and schedules.

Tax is a compulsory payment to the government on income earned by Individuals/entity with out any "QUID-PRO-QUO”. It is not a voluntary payment, but a compulsory contribution forced by government authority. In a modern day economy everything, starting from individual, businesses to big corporate need to pay their taxes. Paying taxes in time is something that every business has to do. The affair becomes complicated for businesses since, to arrive on the figures they need to keep a tab of their income and expenditures for the entire year. As such accounting and bookkeeping help, for proper record of financial transactions, reconciliations, financial statements preparation and then help from tax preparers who assist in the preparation of returns and confirm that the tax have been updated as required by various legislations have become quite important to the entire process.

And with the spurt in activities and increase in the number of bench staff for the companies, have come in to significance the role of outsource service providers who aim towards helping the businesses with their taxes. The tax return preparation service providers provide service for accounting and bookkeeping data by check, justification and data entry of cost and sales invoice in fulfillment with the updated tax legislation; bank and insignificant tax reconciliations; purchase, visa processing, and print of compulsory accounting register; notice to vat office for concluding conservation of registers and original documents. Another factor that calls for outsourcing of tax return preparation is the lack of quality accountants in different countries which has led to abnormal increase in the rates of tax return preparation. For example a recent study in US show that the number of qualified accountants in US is just not enough to handle the increasing demand from increasing tax compliance, estate planning, advisories etc.

This is where the services of outsourcing vendors come in to picture. With their services which are not only affordable, but also best in terms of quality, businesses can be assured about their taxes being taken care of properly. Study shows that outsourced tax returns are not only turned around faster but also come 40-60% cheaper. Another great advantage associated with these companies is that they offer personalized services based on the needs of the clients/businesses. Since they are specialists, the tax preparers keep themselves updated on recent legislations and policy change. Also they are prompt to calculate the effect of such changes on the overall tax liability of the firm. Also they ensure that they file the data, create track sheets, and other necessary things needed to file the right amount of taxes.

With so many advantages involved, it its hardly surprising that the tax processing outsource business has dramatically expanded beyond the client to tax preparers and now, to back-office outsource processing. Many CPA and accounting firms are choosing to outsource tax return preparation to help minimize operating costs and maximize efficiency and gain competitive advantages.

There are many advantages associated with tax return outsourcing. these can be highlighted as under:

• Reduction in the cost of Tax Preparation by 60%.

• Fast Turn around time with 100% client Satisfaction.

• No need to go in for increased workforce in busy seasons.

• Better quality of work as the tasks are handled by persons are experts and very very professional.

• Confidentiality and Security

• Personalized services.

Considerations like these are leading to a spurt in off shoring of tax return preparation to domains outside national boundaries. The increasing number of US tax returns being prepared out of the US stand testimonial to this. A study shows that around 360000 returns were prepared in India in 2006.This figure is likely to jump to around 1.6 million by 2011.And with technologies getting better and better with each passing year it can be safely assumed that these predictions can be easily bettered for better.

Article Source : Business Tax

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Both Wayne M Davies & Sukant Senapaty are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Wayne M Davies has sinced written about articles on various topics from . Looking for more small business tax tips? For a free copy of the 25-page Special Report "How To Instantly Double Your Deductions", visit