How Much Is A Proprietorship Year-End?

Woman Sitting alone on a stool in a business, highlighting sole proprietorship and the proprietorship year-end business taxes

How much will I have to spend on my business taxes at tax time? This is a question most people ask when they start a business. Most of the time, when a person starts a business, they will start the business as a sole proprietorship or an unincorporated business. Essentially this means that you did not go through the process of incorporating the business so it is not a legal entity on its own and will be a part of your personal tax return that will be due on June 15 every year (the tax filing deadline for individuals with a business or self-employment income is June 15 instead of the April 30 deadline for most individuals). The business taxes will be filed as a part of your personal tax return.

Cost of Filing Taxes for a Small Business

The cost of preparing and filing your business’s taxes in combination with your personal taxes ranges from $250 – $600. This is for basic small business. It’s definitely possible to exceed the $600 point depending on if a higher-priced accounting firm is used and if your business is relatively complex. If you find tax preparation for your business is surpassing the $600 price point then it may be beneficial to incorporate your business, a discussion that can be held in detail with your accountant.

The range of $250 – $600 is from my knowledge and experience within the accounting industry and working with large international accounting firms and also with relatively smaller, local accounting firms. The largest variable I have found is that the price depends on the firm that is preparing your taxes. Most firms have a basic charge for businesses, regardless of how much time the engagement takes. This basic charge varies widely for different firms. For example, one firm may charge $250 as a basic business tax fee but another firm with the same credentials will charge $500 as a basic business tax fee.

The basic charge, which is charged by a firm, is the basic flat fee for a business. For example, if you have a business that has zero or relatively little activity during the year, the firm preparing its taxes will charge a basic flat fee since the business will still need the relevant business schedules filed regardless of the amount of activity.

Cost & Complexity

The price increases from the basic fee for any complexity the business possesses that would translate into more time spent by the accountant preparing the taxes. This can result from a variety of factors such as:

  • Capital assets owned and used by the business that need to be accounted for in the business’s tax return.
  • In-home business deduction claimed by the business proprietor.
  • Vehicle expenses or mileage claimed.
  • Any other items, such as sales taxes, which are not encompassed within the above or general business expenses.

The above is a guide to empower an unincorporated business owner with a framework of price expectations to help them when planning for cash flows and/or creating a budget for year-end proprietorship.

See our Cost of a Corporate Year End article for more information on the tax costs of incorporation.