It’s never too early to think about how you’re going to ensure that your year-end taxes get filed correctly. Even though you probably file taxes throughout the year for your small business, it’s good practice to review the records of what you have already filed to make sure you don’t accidentally miss anything. If you can help it, don’t overpay either.
Don’t be tempted with procrastination! If you had a good year and think you may owe a lot, take a step back. When you have a combined estimate of taxes already paid, plus what you will earn for the year overall, you give your tax accountant advantage—time. With this extra time, you can calmly look for possible deductions so that you don’t miss anything. Running through your 2019 tax checklist for small businesses doesn’t need to be strenuous at all.
Keep an eye on small business tax filing schedules
You file quarterly income taxes on your business income with Form 941. And if you have employees, you’re also required to make monthly deposits of federal employment taxes withheld for yourself and your employees’ social security and Medicare taxes. Although you deposit federal employment taxes monthly, you include the aggregated total with your quarterly filing. That is a lot of taxes to track, so let’s begin early.
Federal and State Unemployment Taxes
Federal Unemployment Taxes (FUTA) and State Unemployment Taxes (SUT) are a little different. The IRS only requires you to file Form 940 once a year by January 31st. However, if you have an ambitious accountant and paid them throughout the year, then the IRS gives you an extra ten days to submit the form.
Businesses in manufacturing, fuel, or communications may be required to file a separate excise tax. These can be situational for your industry. Carefully review federal and state laws for rules which apply to the products you sell and when forms are due to be filed.
Tips earned information tax return – Form 8027
Recording tips is important for restaurant and bar businesses and hospitality industries. This IRS schedule is a bit more lenient, giving you through March 31st to file for the tips your employees recorded for the year.
Filing as self-employed
Self-employed individuals who own pass-through entities, such as LLCs, in any industry are eligible to deduct 20% of their reported net profit up to $157,500 as an individual filer. The provision was a huge bonus of the tax cuts and jobs act (TCJA). Don’t miss this one. If you’re just starting out in your business, be aware that the IRS requires self-employed and pass-through entities to file quarterly.
Healthcare premiums and enrollment
Self-employed tax filers are also able to deduct healthcare premiums as a business expense. Add these to your itemized deductions along with those you are more familiar with, such as a vehicle, home office, and travel expenses.
As an employer, check to see if all your employees enrolled on time. It would be a simple check if you employed them since the prior year. Make sure new employees had proper orientation and signed up for healthcare coverage and paid premiums the month you hired them. Healthcare coverage is an important 2019 tax checklist item for small businesses since it’s a tax-affecting item for you as an employer.
Double-checking your 1099 forms
Check that you documented all contract labor or consulting work you paid for during the year, including:
- Service provider
- Dates of service
- Total amounts
- Work description
Work that each contractor completed for the year needs to be recorded, summarized, and reported to the IRS as a business expense when you file. Each contracting entity or individual should be sent a 1099-MISC form.
Small business deductions checklist
Does your business own property? If so, you may be eligible for a property tax deduction. The list below shows some possible deductions to add to your 2019 tax checklist:
- Property tax
- Mortgage interest payments
- Charitable donations
- State and Local Tax (SALT)
It’s in your best interest to use line-item deductions. Some companies are also eligible for tax deductions on increasing investments in research and development. If this is you then congratulations—preparing for your 2019 taxes is paying off already!
Tax professionals can now pull it all together
Yes, having such a thorough tax preparation checklist does increase your workload—but only temporarily. In the long-run, it will be worth the years of dedication to your craft, your business on paper, and the bottom line of your year-end statement. Incorporating the support of a highly-experienced tax professional is also never a bad idea. SD Mayer Tax Services has a team of professionals with decades of combined experience to help you execute your business tax strategy in the way that benefits you and your business the most.
We have a decades-long relationship with the San Francisco Bay business community. We live, work, and play here just like you, and we want to do everything we can to help support small businesses. Contact us today to speak to a seasoned tax professional.