Guide to Filing Your Business Taxes Electronically

Find out what's required

Whether you're a business newcomer or a seasoned pro, you may still be in the dark as to what's required when filing your taxes.

I recommend: Small business tax workshops are available in some states — and if your state doesn't list one now, check back closer to tax filing time. The IRS also offers a virtual small business tax workshop, both as sound files and as text. Lesson 3 shows sole proprietors, partners, and corporations how to file taxes electronically.

Apply for an Employee Identification Number (EIN)

If you have employees or file as a corporation or partnership, you need to include an EIN on your business' tax filings.

I recommend: The IRS website tells you far more than you'll ever need to know about EINs, or you can skip the wordy intro and go straight to the online EIN application.

Whip out the W-2s

If you've withheld income, Social Security, or Medicare taxes from an employee, then you must file a W-2 form with the Social Security Administration (SSA).

I recommend: Filing W-2s online with the SSA gives you more time to file (end of March versus end of February), provides you with an electronic receipt, and reduces the amount of paper you need to handle. You'll need to set up an account on the SSA site first, but in future years, the account will be there waiting for you.

Outsource the paperwork

If you'd rather have an accountant do the drudgery for you, there are numerous ways to find accountants who provide electronic filing services. Alternatively, use the Web to find tax software that will help you file your taxes online.

I recommend: The IRS maintains a list of business providers that provide electronic filing services, such as Paycycle, Perquest, and Corporate Payroll Services (which do the work for you) and TaxExact, Taxsoftware.com, and Drake Software (which provide you with forms where you input your own data).

Pay the piper

Filing electronically can be fast and easy, but you still have to suffer the most painful aspect of tax filing: paying the bill.

I recommend: You can pay current bills by credit card or direct withdrawal from your checking account. Another option is to sign up for the Electronic Federal Tax Payment System (EFTPS); through the EFTPS, you can pay current bills in addition to scheduling future payments that are automatically withdrawn on the date and time that you set. The IRS receives notice of these payments, so your tax records are always up to date.