Here’s why tax season doesn’t have to be a headache for smaller companies.
Once again we find ourselves in the middle of tax season, not exactly the most exciting time of year for a small business owner, but a financial responsibility nonetheless.
With modified due dates and an administration change, 2017 is turning out to be a confusing year for small business tax filers. Here are a few business tax filing tips and updates you need to know so you can win this tax season.
1. Know your dates and forms.
With April 15 falling on a weekend, the IRS has adjusted certain tax filing deadlines. Here are the key dates and tax forms you should keep in mind, according to the type of business you run.
“With April 15 falling on a weekend, the IRS has adjusted certain tax filing deadlines.”
- Sole Proprietorships and Single-Member LLCs: Should file a Schedule C along with their personal income tax forms by Monday, April 17. If you file for an extension, the deadline is Oct. 16.
- Partnerships: Should file a Form 1065 and Schedule K-1s. The due date has changed to March 15 (it used to be April 15). However, the extension deadline is still Sept. 15.
- S Corporations: Should file a Form 1120 S, and the deadline is also March 15. Like Partnerships, the extension due date is still Sept. 15.
- C Corporations: Corporations whose year ends on Dec. 31 should file Form 1120 by April 17 (it used to be March 15). If you file an extension, it is due Oct. 16.
Keep in mind that if you file for an extension, the estimated payments you will owe the IRS are still due on your given tax deadline. The extension is for the filing (paperwork) only.
2. Take advantage of tax breaks.
You can save money at tax time by knowing exactly what you can write off. Several tax breaks have been extended through 2017. If you qualify, now is the time to claim them
- Section 179 Limits: The limit on deductions for business equipment purchases remains at $500,000 for purchases under $2 million. Because of the PATH Act, you can get credit for the full cost of equipment that is purchased and put to use during the tax year. Qualifying equipment includes computers, “off-the-shelf” software, office equipment, office furniture, business vehicles, business equipment and other tangible personal property that is used in your business. This tool will help you calculate your deduction.
- Section 179 Bonus Depreciation: 2017 will be the last year to claim a bonus 50 percent depreciation tax break on new equipment purchased within the tax year. Bonus depreciation will decrease to 40 percent in 2018, 30 percent in 2019 and unless Congress passes a new law or extension, it will expire in 2020.
- Work Opportunity Tax Credit: This tax credit is available to business owners who hire individuals from target groups that have traditionally faced barriers to employment, including military veterans, TANF and SNAP recipients and ex-felons. The credit is equal to 25 or 40 percent of the new employee’s first year wages, with maximum limits set for each target group. You can learn more and see if you qualify here.
3. Handle ACA tax obligations properly.
“You can save money at tax time by knowing exactly what you can write off.”
- Healthcare Reporting: Businesses with 50 or more full-time employees are required to offer qualified, affordable health insurance or pay a penalty. This should be done using forms 1094-C and 1095-C. The IRS has a FAQ page about these forms here.
- Healthcare Tax Credit: Businesses with less than 25 full-time employees who pay an average salary of $50,000 or less – but offer these employees coverage through the SHOP Marketplace and pay at least 50 percent of their premium costs – can qualify for a special tax credit. To find out if you are eligible, go here.
These tips should help ensure you file the correct tax documents, hit the 2017 deadlines and maximize your savings.
While you’re at it, make sure to set yourself up for success next tax season, too. There are plenty of things you can do today to get your next filing in order, maximize your tax deductions and prep for next year.
Tax season may not be the favorite time of year for small business owners, but at the very least, it should never catch you off guard.
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