You are here
Electronic Solutions for Your Business Taxes
Comments welcome on this page. See Rules of Conduct.
Electronic Solutions for Your Business Taxes
Electronic solutions for your business taxes give you 24/7 flexibility for filing, avoid postage and mailing hassles, save paper, and ensure that your returns and tax payments are received.
Federal returns. All business-related federal tax returns can or must be filed electronically. These include:
- Income tax returns (Schedule C with Form 1040 for sole proprietors, Form 1065 for partnerships, Form 1120S for S corporations, and Form 1120 for C corporations) are filed with the IRS. While large corporations (assets of $10 million or more and 250 or more returns, including W-2 forms, filed annually) are required to e-file, other businesses theoretically can choose to do so. As a practical matter, however, if you use a paid preparer who is required to e-file, then your return will have to be filed electronically.
- Employment tax returns (Forms 940, 941, 943, and 944) filed with the IRS.
- Retirement and employee benefit plan returns (Form 5500) must be e-filed with the Department of Labor’ ERISA Filing Acceptance System (EFAST2) (only very small plans can file paper returns, which must be completed online using a fillable form from the IRS).
- Excise tax returns (Form 720). Certain filers are required to file electronically under the Excise Summary Terminal Activity Reporting System (ExSTARS), a fuel reporting program.
State returns. Check with your state to see whether electronic filing is permitted and/or required for your business-related returns. Find a link to your state revenue department through the Federation of Tax Administrators.
Social Security reporting. If you have a payroll, you must file a copy of employees’ W-2 forms along with a transmittal (IRS Form W-3) to the Social Security Administration. You may mail these forms, or you can transmit them electronically using the Social Security Administration’s Business Services Online. You do not send any Social Security and Medicare (FICA) payments to the Social Security Administration; these payments are made to the U.S. Treasury, as explained below in “paying taxes.”
Most employers are no longer permitted to deposit their taxes at their banks using tax coupons. Instead, they must deposit their taxes using the Electronic Federal Tax Payment System (EFTPS). There is no charge by the government for using this service. Very small employers (payroll taxes under $2,500 for the year) may pay the tax when they file the annual Form 944; the IRS must give approval for filing this form instead of quarterly filing.
While not mandatory, business owners may want to use EFTPS to pay their estimated taxes. Payments can be scheduled up to 356 days in advance, which is helpful for those who travel frequently.
Credit cards. Federal (and many state) taxes can be charged to major credit cards. There are three IRS-approved services providers:
While the IRS does not charge anything for paying taxes with a credit or debit card, the service provider charges a “convenience fee” of between 1.95% and 2.35%.
Getting tax news
The Internet is just the tip of the iceberg when it comes to tech-smart ways to obtain tax news. In addition to the websites of the IRS and your state, there are new ways of learning about tax developments impacting your business:
- YouTube videos. The IRS has been using videos to help explain tax matters. Videos to date have focused on personal income taxes, but expect to see videos for business taxes in the future.
- Apps. The IRS has a new app called IRS2Go for tracking personal income tax refunds on iPhones and Androids. Expect to see in the future more IRS apps that will be useful in your business.
As more emphasis is placed on technology, look for new opportunities to use the Internet and smart phones to handle your tax obligations and, to some extent, simplify your life.
Barbara Weltman is an attorney, prolific author with such titles as J.K. Lasser’s Small Business Taxes and The Complete Idiot’s Guide to Starting a Home-Based Business, and trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day® and monthly e-newsletter Big Ideas for Small Business® at www.barbaraweltman.com and host of Build Your Business radio. Follow her on Twitter @BarbaraWeltman.
About the Author:
Barbara Weltman is an attorney, prolific author with such titles as J.K. Lasser's Small Business Taxes, J.K. Lasser's Guide to Self-Employment, and Smooth Failing as well as a trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day® and monthly e-newsletter Big Ideas for Small Business® and host of Build Your Business Radio. She has been included in the List of 100 Small Business Influencers for three years in a row. Follow her on Twitter: @BarbaraWeltman.