Ultimate Guide to Taxes for Small Businesses

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Congratulations on starting your business in 2012!

Step 1: Know your deadline.

Mark April 15, 2013 on your calendar! If you're a sole proprietor, you report your business income and expenses on your personal income tax return which is due to the IRS on April 15, 2013 unless you file for an extension.

Step 2: Determine gross receipts and sales.

Gather the records for the business-related income you earned in 2012. This includes payments you received via credit card, cash or checks and third-party payment services like Paypal, Google Checkout, Amazon Checkout, and Etsy Direct Checkout.

Step 3: Determine offsets to your income.

Gather your records for any returns and refunds you issued to customers.

Step 4: Determine your business expenses.

Gather the records for the business-related expenses you incurred in 2012. There are over 22 expense categories which these can fall into. Refer to the Deduction Comparison Tool to find the average expenses for a business in your same industry.

Step 5: Complete the Schedule C form.

Now that you've gathered your income and expenses for 2012, you need to figure out where to enter them on the IRS Schedule C form. In order to do this, categorize each income and expense item into its appropriate IRS-defined expense category. If you've imported your income and expenses into Outright, this will automatically be done for you.

If you're still nervous, don't despair! You can automate much of this work by using Outright to pull in data from your various business accounts (credit card, bank, Paypal, etc.) and auto-categorize the income and expenses into IRS-approved categories.

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