During tax season in America, there seems to be a never-ending list of tasks to complete to get you through filing your return. Being too organized is no such thing when tax authorities are involved. This is especially true for eCommerce owners in America. These steps will help you build a plan of action, giving you a jump start to filing your taxes well before they’re due.

Tax Guide and Deadlines for US eCommerce Owners

Know Your Deadlines

To hit your deadlines, you must know them. Avoid expensive penalties by adding these dates to your calendar:

  • Jan. 31, 2020 – Create a 1099 and/or W2 and submit (if >$600 was paid to an independent contractor or employee in 2019)
  • March 16, 2020 – Taxes due for Partnerships (Form 1065) and S-Corporations (Form 1120S)
  • March 31, 2020 – Submit copy of Form 1099 sent to employee(s) to the IRS
  • April 15, 2020 – Taxes due for C-corps (Form 1120) and *Individuals (Form 1040)
  • May 15, 2020 – Taxes due for Exempt Corporations (Form 990)
  • Sept. 15, 2020 – Ultimate deadline for Partnerships and S-Corps (w/extension only)
  • Oct. 15, 2020 – Ultimate deadline for C-Corps and *Individuals (w/extension only)
  • Nov. 16, 2020 – Ultimate deadline for Exempt Organizations (w/extension only)

*Individuals who’ve had over 200 sales/transactions AND over $20,000 in sales with the same payment processor will also receive a 1099-K.

If there is any doubt you’ll be able to file your return by its original due date, file for the extension to give yourself (or your tax preparer) almost 6 additional months to gather all your paperwork and file.

Regardless if you file for the extension, you’ll be liable for paying any income tax owed by the original filing deadline. Fees start to accrue the day following your due date. Penalty fees vary from 5%-25% of your unpaid income taxes each month they’re late.

Have Well Organized Receipts and Business Records

Going paperless is not only good for the environment, but receipts stored online also saves you the hassle of sorting through a hill of paper when tax season rolls around.

Keep your business spending separate from your personal. The IRS has a higher chance of flagging any disbursement of funds that don’t appear to be regular and necessary for your business. Comingling of a personal and business account is against tax law.

Solid, Updated Bookkeeping

For a stress-free tax season, keeping your bookkeeping updated year-round is key. In case of an audit, your business’ income and expenses laid in a clear set of books provide protection. Plan ahead by closing your books at the end of every month/quarter/year. Bookkeeping can be processed by using online accounting software or a professional bookkeeper.

Common Tax Deductions for eCommerce Sellers

If your business is new, take counsel from an accounting professional as some of your expenses possibly fall under costs for starting-up. Maintain proper documentation for future deductions and tax credit claims. Unless otherwise noted, the following expenses can be deducted on Form 1040’s Schedule C.

  • Internet and Phone Costs – If the phone is solely used for business, its plan is a deductible utility. A portion of your internet is a deductible utility if you use a single web connection while working out of a home office.
  • Education – Workshops or classes that add value to your business/grow your expertise are deductible.
  • Home Office – Your home office space is used solely for business, frequently, and you conduct most things regarding your business there. This deduction can be calculated by using either the regular method or the simplified method.
  • Shipping Costs
  • Use of Vehicle for Business – Track your miles for business trips and record the number of miles driven throughout the year and keep a record of post office trips and/or meetings in your calendar.
  • Legal/Professional Fees – Fees collected by accountants, bookkeepers, and are directly related to running your business.
  • Online Service & Web Hosting Fees – Online service platforms used to run/maintain your business and domain registration fees are deductible.
  • Equipment – If you outright own your camera, computer, or cell phone, the cost of the equipment can be recovered through a Section 179 deduction or depreciation. Consult with an accountant for best options/results.

Use this as a guideline to have a less stressful tax season and maximize your deductions. Keep tabs on your state’s sales tax requirements to avoid further worries. Monthly maintenance of your books, business records, and being cognizant of approaching deadlines will make your tax filing easy.