By Chris Peterson, CPA, MTX, Tax Manager of CB Smith & Associates, P.C.
With changes to tax laws in recent years, it’s more important than ever to be aware of how those changes may affect your business. Although you might be accustomed to handling your business’s tax returns on your own, having a professional who can help guide you through the process could make a significant difference both financially and in the efficiency of your day-to-day operations.
Whichever path you choose, here are three things to keep in mind as business return filing deadlines approach.
Deadlines. If your business is structured as an S-Corp (on a calendar year) or a Partnership, the income tax return filing deadline is Monday, March 16, 2020. For C-Corp structures, the deadline is April 15, 2020. If time is just not on your side, the extended deadline for S-Corps and Partnerships is Sept. 15, 2020, and C-Corps is Oct. 15, 2020. Remember that an extension of time to file is not an extension of time to pay your tax. Any additional tax due must be paid with the extension request, or late payment penalties and interest could be due.
Details matter. The deductions are often in the details — and, given that deductions could potentially save your business money, diving in to the nitty gritty can be worth the effort. For example, several factors will determine whether it’s better for your business to take Section 179 versus bonus depreciation on new or used equipment. This is just one strategy you’ll want to look at, and consult a certified public accountant about, in terms of deductions. You can find more on this topic here.
Tax prep and planning. Although your immediate focus may be on getting your 2019 returns completed and submitted, now is the ideal time to start planning for future returns. Engaging in tax planning and preparation with an eye toward compliance, when done throughout the year, helps you make informed decisions about your business. Essentially, it’s the ongoing process of looking at various tax options to determine when, whether and how to conduct business and personal transactions so you can reduce or eliminate your tax liability. Tax planning can help with:
· Claiming any available tax credits
Reducing the amount of your taxable income Lowering your tax rate Controlling the time when the tax must be paid
Additionally, creating monthly financial statements for your business, like the accounting firm I work for does, helps reduce surprises when it comes to the results of your tax return filing. It also can create more peace of mind for you as a business owner by improving the efficiency of your business operations, giving you a road map on how your business is doing and decisions that may need to be made because of it, and reducing the last-minute scramble to gather and prepare tax documentation.
It’s not too late to bring some order and sanity to the preparation and filing of your 2019 tax returns. Tax professionals are typically a tad bit busier this time of year, as you can imagine, but many are ready and willing to help. Reach out and ask for assistance. Your bottom line, and your well-being, may be glad you did.