The leaves are changing, the jack o’lanterns have changed into turkeys, and fall is definitely in full swing.
That can only mean one thing - it’s time for businesses to get ready for tax season!
We know that you don’t want to hear that right now, because quite frankly, no business likes thinking about tax season, but it will be here before you know it. Need some advice? Keep reading for some tips on how to prepare for tax season in 2019!
Keep Your Tax Deadlines in Mind
In reality, while personal income taxes have a definite calendar and one filing date, business taxes do not. Your business tax deadlines are dependent on the type of business you have. During the year, businesses either have dates to file paperwork with the Internal Revenue Service oˇr dates to pay taxes. Here are the deadlines you need to keep in mind for tax preparation or paperwork:
If you run an S Corporation:
(Form 1120S) S corporations are very small businesses, usually consisting of just a single person, your filing date is March 15, 2019. Your extension deadline is September 16, 2019.
If you have a partnership:
You and your partners share responsibilities, and (Form 1065), must file your return on March 15, 2019. The extension deadline for partnerships are September 16, 2019.
If you file as a sole proprietor:
(Form 1040) You can file your taxes on your personal income tax if you want, which is what most sole proprietors choose to do. If you are going to file on your personal taxes, your filing deadline is the same as your personal tax deadline, April 15, 2019. Your extension deadline is October 15, 2019.
If you run a C Corporation:
(Form 1120): If you normally have fewer than 10 employees, your business is taxed separately. Your filing deadline is April 15, 2019. Your extension deadline is October 15, 2019.
If you run a nonprofit organization:
If your business is a charity, your filing deadline is May 15, 2019. Your extension deadline is August 15, 2019.
Prepare Ahead of Time with Tax Software
While many people can afford to wait until the last minute to do their personal taxes, with business taxes you can’t afford to wait until the last minute. If you loathe the idea of doing taxes, you might want to think about investing in tax or accounting software.
There are many different kinds of accounting and tax software available–and all of them are a benefit to small businesses. Here are a few of the best accounting and tax software programs you might want to think about.
QuickBooks is perhaps the best known of the business and tax software packages. There are lots of advantages to this software. One of the reasons so many businesses like QuickBooks is that it grows as your business grows, so that you can keep the same software and add features as you need them. The tax software also makes sure that you are catching all possible deductions so that when tax time does roll around, you are ready.
Xero first started as a Mac alternative for QuickBooks, because creative businesses that used Apple products found that QuickBooks did not have the same features on the Mac version as it did on the Windows. However, Xero has evolved from the QuickBooks substitute to being able to keep track of receipts, all of your expenses, any inventory tracking for tax purposes, and invoicing clients big and small. Xero also has the ability to integrate with over 600 apps and has grown to become a fully functioning accounting system.
Additionally, you may want to look at Xero for payroll purposes as well. Xero has applications that can help you manage payroll, and prepare for payroll taxes. Some of the possible Xero applications can pay your employees via electronic transfer, and prepare your tax forms.
Freshbooks and Zoho Books
Both of these software accounting programs combine the ease of learning something new with the ability to use the software to help with tax preparation. Like Xero, both of these software programs have app integration functions that allow small businesses to personalize their accounting software.
These software programs not only help you during tax time, but they can also help you automate as many functions as possible so that you are prepared before tax season starts. Your tax preparation may be as simple as printing out some forms and paying taxes.
Does My Business Have to Pay Quarterly Taxes?
If you thought you only had to pay taxes on your business by the year, think again. Some businesses have to pay taxes quarterly, rather than year by year. The rules are a little confusing, but in general, sole proprietors, because they file taxes under personal income taxes, do not file quarterly taxes. However, if your sole proprietorship makes a lot of money, or you receive a 1099 for contract work for your sole proprietorship, you need to file quarterly taxes. Also, most LLCs, S corporations, and C corporations must file quarterly taxes.
Put simply, quarterly taxes are an estimate of the taxes you will pay at the end of tax season. In reality, the IRS doesn’t want to wait for you to pay all of your taxes in April. Also, it is most likely better for you to pay every quarter, so that your tax burden will not be as massive as it will be in April. Instead, you can split your taxes up into four quarterly payments. There are also accounting software programs that will allow you to split your payments up into monthly payments as well to make it easier on you financially.
Here are the quarterly deadlines for the upcoming year.
|Quarterly Deadline:||Due Date:|
|First Quarter Tax Estimate Deadline||April 15, 2019|
|Second Quarter Tax Estimate Deadline||June 17, 2019|
|Third Quarter Tax Estimate Deadline||September 16, 2019|
|Fourth Quarter Tax Estimate Deadline (Corporations)||December 16, 2019|
|Fourth Quarter Tax Estimate Deadline (Individuals)||January 15, 2020|
Get Your Deductions in Order
There are lots of possible deductions you may be able to take for your business. First, you may be able to take a tax deduction for all of your assets that you bought for your business. In order to take the deduction, you will need to purchase those assets by June 30, 2019. There are some exceptions – aren’t there always? Your business must have an annual revenue of less than $10 million, and the piece of equipment must be $20,000 or less. Be sure you keep all of the receipts and invoices for purchases for your records.
You can deduct your mileage from your car or truck, or company cars and trucks, for any miles used for the business, which includes client meetings, visiting work sites, picking up supplies, or any other business-type car runs. With mileage, you choose to either deduct based on the current IRS mileage rate (54.5 cents per mile) or you can deduct by gas and maintenance. If you use the mileage rate, you will need to keep accurate mileage records. If you deduct by gas and maintenance, you will need to keep receipts.
A lot of your office expenses are deductible as well, as long as you keep the receipts. You can deduct for office supplies, office rent and all utilities, insurance, and professional fees as well. As with everything else you are deducting, you will need to keep all receipts and invoices for tax purposes.
With receipts in mind, one of the best ways to prepare for tax time is to use a program that categorizes your receipts for tax purposes. Many accounting and tax software programs have a function that allows you to put all of your receipts and invoices in one place, and then categorizes them so when you are ready to file taxes, all of the work figuring up your business expenses is done for you. If your accounting program doesn’t have this feature, you may want to try an app or program for organization: Expensify, Zoho Expense, Evernote and Smart Receipts are a few of the scanning and cataloging apps for expenses that will get you prepared for tax time so much more quickly.
When Do You Know It’s Time to Hire an Accountant to Prepare for Tax Season?
When you start to make mistakes on your business taxes, such as when you accidentally deduct your loan payments on the new trucks you purchased, and you end up having to pay more money out than you should.
When not even a computer program can keep up with expenditures or invoicing, because it needs to be looked at on a daily basis, and you don’t have time for that.
If you have so many employees, you need something to help you out besides a payroll service.
When you are no longer just breaking even, but you are making real money and looking to expand your businesses.
When you are looking for someone who can help maximize your tax deductions while you have to put out minimal effort.
When you begin to have concerns about dealing with government forms and documents, and you are not sure you’ve filed everything properly.
When you are seeking additional funding to grow your business.
How Do You Find an Accountant?
So because accountants don’t grow on trees, you will need to figure out how to find a good, reputable accountant to help with your business finances, including tax preparation. First, you will want to find a certified accountant. Certified accountants must pass an exam and study under a practicing accountant as well, so they are qualified for business accounting.
You may also want to look for an accountant who is familiar with your type of business. For example, if you are a florist, you would want an accountant who was familiar with seasonal runs, and how and where flowers are shipped and stored, as well as the shelf-life of the flowers you use. You would also want an accountant that is familiar with the importance of customer service. However, inventory knowledge may not be as important for a job in a service-oriented company.
If you have a business organization in your community, they may be able to help you make a connection with an accountant who will be able to help your business during tax time, as well as help you figure out the financial direction your company is going. You can also ask government agencies, such as the Small Business Administration for recommendations for an accountant.
Tax season can be stressful, but if you use these steps to prepare for it, it won’t be so bad when 2019 rolls around!
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