Small Business Tax Tips for 2024

If you owe taxes and don’t file a return, you will be subjected to steep fines plus interest on the money you owe. If you refuse or ignore paying the IRS for some time, they might implement collection proceedings. Collection measures could put a lien on your assets including your home, bank accounts, etc.

If you can’t file a return on time, you should file for a tax extension.  If you don’t have the money to pay your outstanding taxes, you should contact the IRS to work out a payment schedule.

If you don’t owe the IRS any taxes you won’t be penalized If you don’t file a tax return. But if you are due a refund and don’t file a return, you won’t get the refund.

Tax deductible expenses are the ordinary and necessary expenses of running your business. They get subtracted from your income to determine your net profit.

Current expenses are the costs you incur to run your business on a day-to-day basis. These include things like rent, utilities, Internet provider fee, website hosting, marketing costs, and other costs of doing business.  Current expenses can be deducted in the year the expense is incurred. (link to the top 19  deductions article when published)rnrnCapital expenses are expenditures that are expected to benefit the business for more than the current year. These include money spent for things such as computers and other equipment, machinery, furniture, vehicle purchases, land, and buildings. Capital expenses are deductible over the useful life of the asset. However you can write off some or all of the cost of capital expenses in one year using the 179 expense deduction and/or the bonus depreciation.

An independent contractor is a person or company that works for clients and bills them for the work. They control how the work is done, get paid for the work completed, and do not have taxes withheld from their payments. They are responsible for calculating and paying taxes themselves.

Employees are full-time or part-time workers whose work is controlled by the employer. The employer can dictate when, where, and how the work is done. Employees have taxes withheld from their paychecks, but half of the cost of Social Security and Medicare taxes are paid by the employer. They may receive other benefits as well. Read this article for a detailed explanation of the differences between employees and contractors.

The tax deadline for personal income tax returns  and sole proprietors is April 15.

The tax filing deadline for  information returns for S corporations and Partnerships is March 15.

The deadline for C corporations is the 15^th day of the  fourth month after the fiscal year ends.

When the 15^th of the month falls on a Saturday, Sunday or legal holiday, the due date is delayed until the next business day.

Businesses who hire independent contractors have to send Form 1099-MISC to recipients by February 1, 2021, and file it with the IRS by March 1 (March 31 if filing electronically)

Businesses with employees have to file W-2 forms by January 31 as well as file employer’s quarterly reports

Keep accurate records of all your income and expenses. Don’t forget about business income from PayPal, Venmo or other similar sources. Under a law that went into effect at the beginning of 2022, those services have to file a 1099 form for anyone who receives $600 or more in payments through their system.

Save your receipts.

Know what tax deductions you’re entitled to, and record even small amounts. They add up at the end of the year.

Consider hiring a tax professional to prepare your returns and give you other financial advice related to your business. You’ll save hours of your own time and gain peace of mind knowing everything is being done correctly.