Tax Strategies for Keeping on Track Year Round
Taxes for a small business owner are a big deal. Recent results from a 2017 CNBC/Survey Monkey study found that taxes are the number one concern of small business owners. Nationally, a quarter of small business owners reported that taxes are the most critical issue currently facing their businesses.
For many small businesses taxes can be their largest outlay each year. It does add up when you consider income taxes on profits, employment taxes like Social Security and Medicare, plus sales, property and excise taxes. In addition, small business owners experience other tax-related costs in terms of their time and effort. The process for small business owners can be complex with tax laws and regulations constantly changing and even overwhelming as the record keeping and cash flow planning for various tax requirements also falls on owners.
It is an inevitable part of any business though. So let’s start with when each type of business entity needs to file 2017 taxes in 2018 (with a calendar year approach), provided by InDinero:
|Entity Type Tax Deadline||Due Date|
|Original deadline for partnerships and S Corporations||March 15, 2018|
|Original deadline for C Corporations and individuals||April 17, 2018|
|Original deadline for exempt organizations||May 15, 2018|
|Final deadline for partnerships and S Corporations (with extension)||September 17, 2018|
|Final deadline for C Corporations and individuals (with extension)||October 15, 2018|
|Final deadline for exempt organizations (with extension)||August 15, 2018|
Because over half of all small businesses are taxed as flow-through entities, meaning business profits flow through to owners and are taxed under the individual income tax, it’s good to review those deadlines as well. According to InDinero, they correspond to the chart in that the tax return due date for these entities is usually the fifteenth day of the third month of the company’s fiscal year, so March 15 and the extended due date will be September 17, 2018.
Small business owners also need to consider how they want to keep up with handling their taxes year to year and how to avoid any costly penalties along the way. Joseph DeOrio, Bank of America SVP/Small Business Market Manager offers several key strategies and reminders for owners to utilize throughout the year to help alleviate some of the stress associated with taxes.
Use External Resources
Filing taxes is a time-consuming process and small business owners should take advantage of expert resources such as accountants, financial planners or bookkeepers. Network to get recommendations as you want to find someone if possible who specializes in your industry or business size and that you feel comfortable with.
Keep Current on Policy Changes
This year especially with a new administration in office there will likely be additional changes to regulations and the tax code. Small business owners need to be aware of any new laws both at the federal and state level to learn of any changes that might impact their filing and to seek answers from professionals to any outstanding tax questions.
Stay Organized Throughout the Year
Implement a platform or tools to keep organized throughout the year in all aspects of your business, like managing accounts, expenses and payroll. Staying organized is important as businesses incur all different types of expenditures that need to be tracked such as car mileage if you’re using your car for business activities.
Consider Digital Solutions
Find software that can assist with creating tax records, tracking expenses and reporting deductions. There are also apps available like to track your car mileage. The IRS has an app too called IRS2Go, which can provide some answers to smaller tax questions throughout the year.
Putting strategies in place to handle taxes year round can have a direct and positive impact on your business and your business’s bottom line.
Source: Long Island Business News. DeOrio: Tax tips for small business owners to use all year. 4/28/2017