Lesson 60 - Beginner accounting course

60. Filing Tax Returns: Steps and Deadlines

Filing tax returns is a mandatory process for businesses to report their financial activities, calculate their tax liabilities, and submit payments to the government. Understanding the steps and deadlines ensures compliance, avoids penalties, and helps businesses manage their finances efficiently.

1. What is a Tax Return?

A tax return is a formal document filed with the tax authorities (such as the IRS in the U.S. or the Agenzia delle Entrate in Italy) that reports a business’s income, deductions, credits, and tax liabilities for a specific period.

The purpose of filing tax returns is to:
✅ Declare business revenue and expenses.
✅ Calculate the total amount of tax owed.
✅ Claim deductions and tax credits.
✅ Pay any outstanding tax balance or request a refund.

2. Types of Business Tax Returns

The type of tax return a business files depends on its legal structure and location.

For international businesses, tax obligations vary based on local laws. Businesses operating in multiple countries may have to file separate tax returns in each jurisdiction. 

3. Steps to File a Business Tax Return

Step 1: Gather Financial Records

Before filing, businesses must collect:

• Income statements (revenues, sales, and gains).

• Balance sheet data (assets, liabilities, and equity).

• Expense records (operating costs, payroll, rent, utilities, etc.).

• Bank statements for reconciliation.

• Invoices and receipts for deductions.

• Payroll records if the business has employees.

• Previous tax returns for reference.

Step 2: Determine Taxable Income

Taxable income is calculated as:

Total Revenue – Allowable Deductions = Taxable Income

Common tax-deductible expenses include:
✔ Business rent and utilities
✔ Employee wages and benefits
✔ Depreciation on equipment
✔ Marketing and advertising costs
✔ Travel and business meals (subject to limits)
✔ Interest paid on business loans

Step 3: Apply Tax Credits and Calculate Taxes Owed

Businesses may qualify for tax credits that reduce their overall tax liability. Examples include:

• Research & Development Tax Credit

• Investment Tax Credit

• Energy Efficiency Tax Credit

Once all deductions and credits are applied, the final tax liability is calculated based on the corporate or business tax rate.

Step 4: Complete the Appropriate Tax Forms

Using the correct tax return form, businesses must accurately report their income, expenses, and tax liability. Many businesses use tax software (e.g., TurboTax, QuickBooks) or hire accountants for assistance.

Step 5: Submit the Tax Return and Pay Any Due Taxes

Filing can be done:
✔ Electronically (E-filing) – Faster processing and confirmation.
✔ Paper Filing – Traditional method but slower processing.

Payment methods include:

• Bank transfer or online payment via government tax portals.

• Check or money order for mailed returns.

• Installment plans for businesses unable to pay in full.

Step 6: Keep Records for Future Reference

Tax authorities may audit a business’s tax return, so it’s crucial to maintain records for at least 3–7 years, depending on local laws.

4. Tax Filing Deadlines by Business Type

Deadlines vary by country and business entity. Below are the general deadlines for U.S. businesses (similar schedules exist in other countries).

Businesses operating on a fiscal year (not ending December 31) must file on the 15th day of the 3rd or 4th month after their fiscal year ends.

Late filings may result in penalties and interest charges.

5. Common Tax Filing Mistakes to Avoid

❌ Missing the Deadline – Leads to fines and interest.
❌ Incorrect Deductions or Missing Tax Credits – Overpaying or underpaying taxes.
❌ Math Errors – Even small miscalculations can cause issues.
❌ Not Reporting All Income – Risk of audit and legal consequences.
❌ Failing to Pay Estimated Taxes – Businesses must make quarterly estimated payments if they owe significant tax.

6. Using Tax Software and Hiring a Professional

Many businesses use accounting and tax software to streamline tax filing:
✅ QuickBooks, Xero, FreshBooks – Track income and expenses.
✅ TurboTax, H&R Block, TaxSlayer – Prepare and file returns.
✅ Government Portals – Some countries offer free e-filing services.

Larger businesses or those with complex tax situations hire accountants or tax consultants to ensure compliance and optimize tax strategies.

7. Conclusion

Filing tax returns is a critical part of business operations. By following the correct steps, keeping accurate records, and meeting deadlines, businesses can avoid penalties and ensure compliance. Whether using tax software or hiring professionals, proper tax filing helps maintain financial health and legal standing.