Small business owners are reminded to keep important tax considerations in mind as Tax Day approaches. The annual tax deadline for many small businesses is April 15, although deadlines can vary based on factors such as the type of company and the state taxes are filed in. Quarterly estimated tax payments are typically required throughout the year, and certain types of small businesses had to file by March 15. Due to the complexity of business tax filing, experts recommend working with a professional tax adviser rather than attempting to file on one’s own.
As small business owners prepare to file their taxes, it is important to stay informed about any tax changes that may affect their business. Considering an extension may be advisable this year due to pending tax legislation in Congress. Filing an extension allows more time for final paperwork to be completed, potentially saving costs associated with filing an amended return. Small businesses can also optimize their retirement plans under the Secure Act 2.0, which provides tax advantages for offering employee retirement plans. Additionally, changes in research and development write-offs may impact small businesses, as certain expenses must now be spread out over several years.
Small business owners should also be cautious of underpayment penalties, which have increased this year to 8%. This change means that underpaying taxes can result in higher penalties compared to previous years. It is crucial to work with a tax professional to accurately calculate taxes owed and avoid underpayment penalties. Furthermore, small businesses are advised to skip claiming the Employee Retention Credit, as the IRS has cracked down on improper claims related to the credit. Scammers targeting small businesses to help them file for the credit for a fee have led to initiatives by the IRS to recover improperly claimed funds.
To streamline the tax filing process, small business owners should ensure they are organized throughout the year. Keeping accurate records of expenses, receipts, and other financial documents is essential for timely tax filing. Maintaining a systematic record-keeping system will help tax advisers accurately prepare and file taxes on behalf of small businesses. Staying on top of quarterly estimated payments and being able to easily access financial information when needed are key components of effective tax preparation for small businesses. By staying organized and informed about tax changes, small business owners can navigate the tax filing process more efficiently and effectively.
