Wed. Feb 1st, 2023

Congratulations! You’ve started a business, which is an exciting and challenging experience. But the excitement of starting your own company can quickly fade when you start calculating how much you will lose in taxes. Some tax rules around businesses can help reduce or eliminate some of those losses. This article covers how do businesses get tax refunds and how to get started with one.

There are many tax rules around businesses and tax refunds.

Businesses have a lot of rules that apply to them. Certain types of businesses are eligible for tax refunds, and others aren’t. It’s essential to know the difference, so you don’t apply for a refund unnecessarily.

To be eligible for a business tax refund, you must meet specific guidelines set by the IRS (Internal Revenue Service). These include:

  • Having an annual income of less than $500,000
  • Operating as a sole proprietorship or partnership
  • Being incorporated as a corporation

Who is Eligible?

To be eligible for a business tax refund, you must:

  • Have an active business: This means that at least one person is employed by or affiliated with your company.
  • Have a tax bill for the year in question: In other words, if you are in the process of filing taxes for a business that has yet to make any money, then no refund will be available.
  • Be classified as a small business: If your company’s annual revenue is less than USD 50 million per year and it has fewer than 500 employees worldwide, then it qualifies as a small business according to IRS standards and may qualify for certain tax incentives like deductions or credits. If your company does not meet these criteria but meets all other requirements listed above (including being an active business), consider incorporating yourself to become eligible!

What Types of Tax Refunds Are Available?

There are many different types of tax refunds. You may be eligible for a business tax refund if you have overpaid or underpaid the taxes due on your income or if you need to pay more in taxes.

You can claim a business tax refund when:

  • You paid too much tax that year because of an error on your part.
  • A previous year’s return was incorrect, and you learned about it at the time.
  • HMRC has made an error during their processing of your returns.

Lantern by SoFi explains, “An expense generally doesn’t have to be indispensable, however, to be considered necessary.”

How Do I Get Started?

  • You can begin the process by filling out the form on the IRS website. The website has a link to fill out Form 843, Application for Filing Information Returns Electronically. The form asks for basic information about your business, including who owns it and what type of business it is (sole proprietorship, corporation or partnership).
  • You can also call the IRS toll-free at 1-800-829-4933 or visit your local IRS office if you need help with your application.

If you’re a business owner, it’s important to understand how taxes work and the various tax refunds available. If your company qualifies for a refund, it can greatly help improve cash flow throughout the year.

By Grace