If you’re putting off planning for your 2018 tax return, you’re running out of time.
The opening of each new tax season starts toward the end of January. Last year’s tax season began on January 29th, and while we’re still waiting to hear on this year’s timeline, it’s never too early to start planning.
Of course, most businesses leave their tax filing to their in-house accountants or outsourced CPAs, but whether you’re having a professional do it, or you’re taking the DIY approach, it’s good to get a jump start on the process.
Know Your 2019 Filing Deadlines
Individual tax returns are due by April 15th, as they always are. But if you’re filing taxes for your small business, the deadline will come a little earlier (depending on your entity classification). Your first step is to get familiar with these deadlines:
General LLCs, general partnerships, and S corporations – March 15th
Sole proprietorships and C corporations – April 15th
Non-profits – May 15th
Extensions are always possible if you aren’t ready by these dates, but it’s good to keep them in mind during your preparation.
Collect New (And Old) Documents
As you do every year, you’ll need to collect all of your business documentation. If you’re working with a professional tax preparer, this step will be a little easier—you’ll hand them your papers and be on your way.
If you’re taking a DIY approach through online accounting software, you’ll have a bit more work ahead of you. At the minimum, collect the following documents—you’ll need all of this data to fill out your business tax forms:
Records of all business expenses, such as your rental costs, marketing costs, insurance, or utilities;
Records of all earnings, including receipts, sales records, and records for accounts receivable/accounts payable;
Payroll documentation and records of employee benefits.
And remember to locate your filing from 2017. The IRS recommends that everyone keep records of their past returns for at least three years, as your old return may have some data you’ll need for your new filing (such as your adjusted gross income). If you don’t have these records, you can order a free transcript from the IRS.
Get Familiar With the New Rules
As we know, 2017’s Tax Cuts and Jobs Act (TCJA) marked one of the most significant adjustments to U.S. tax code that we’ve seen in decades. The policy offers some interesting new bonuses to business owners who qualify, although the tax cuts will end up affecting all of us in some way.
While your accounting team will be familiar with these adjustments already, make sure you know the ins and outs of the TCJA and how these new rules will change your tax liability:
Lower personal income tax – Right off the bat, every individual filer earning over $9,526 will enjoy a reduced personal tax rate compared to 2017’s brackets.
Lower corporate tax rates – For corporations (and LLCs that elect to file as corporations), the corporate income tax rate has been drastically lowered for those earning over $50,000 annually.
New expensing rules – The rules have changed for how businesses may deduct certain types of business equipment. Broadly, the deduction threshold was raised for qualifying equipment, meaning that business owners will have the opportunity to write off a bigger portion of the costs.
Naturally, the TCJA exemptions favor bigger businesses, and those that have the budget to hire dedicated accounting teams who can fine-tune each return for the maximum benefit. Tackling the process on your own may mean that you’ll miss out on a few deductions that a CPA would catch, but you’ll enjoy the reduced tax liability either way.
It’s Time to Start Preparing
We always push businesses to get started on their tax preparation as early as possible—regardless of your business type or entity classification. This is particularly true for your 2018 return.
With the TCJA adjustments taking effect this tax season (and the IRS reporting that they’re surprisingly unprepared to handle the changes), we expect that companies will be waiting longer than normal to receive their returns. Your best bet for a speedy filing is to get started now and have your accounting team ready to file as soon as the window opens.
Don’t wait! Get in touch with botkeeper today to find out how you can get your books in order and save on your tax filing—before it’s too late.