While Americans may have a lot of opinions about what it’s like to pay their taxes, one thing remains true at the end of the day: they get paid. However, how one chooses to tackle the problem of their taxes each year might differ from person to person.
If you’re running a business, how you approach the paying of your taxes can be even more important. Often, businesses choose between a quarterly tax filing and an annual one. Which will be right for your business will depend on a variety of factors, but it’s a firm decision that you’ll need to come up with.
What do you need to think about when deciding between these two choices? Read on and we’ll walk you through it.
Understanding Annual Tax Filing
The IRS is the government body that keeps track of how much each individual and business owns and ensures that these payments are made. Often, the IRS does this by looking at these entities across the span of a year.
They weigh gross income for a calendar year, adjust for exceptions and credits, and land on an amount of money owed.
Individuals often have taxes withheld from their paycheck automatically. This is then balanced out when filling out a tax return during tax season each year. This is the main schedule of annual tax filing, where the actual math of how much you owe or are owed by the government is determined in April.
However, going with this form of tax filing can potentially leave a big surprise for you come tax season. What is a way around this?
Understanding Quarterly Tax Filing
Some individuals and businesses may choose to file their taxes with the government each quarter as opposed to doing so at the end of the year. This can help to prevent a moment of underpayment, and penalties that come with that, from occurring.
If it’s difficult to stay on top of how much money you might owe the government at the end of the year, for any reason? It might be worth filing quarterly taxes. This can help give you a four-times-a-year check-in on what the status of your tax life is currently like.
This can prevent penalties from being issued and can help ensure you stay on top of your debt as a responsible taxpayer.
If you’re not sure which of these options is right for you, you might need to speak to a professional. There are payroll services oregon businesses offer that can help to make this decision.
A professional can look at your situation and decide which form of tax filing might suit you best.
Business Tax Filing Tips
Handling your business taxes can be stressful even for the most experienced business owners. However, if you can learn to understand the difference between annual and quarterly tax filing, you can set up a system that will better support your future endeavors.
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