The Ultimate 2024 Tax Season Survival Guide for Businesses
Hello, business owners and entrepreneurs! As we step into 2024, it's time to gear up for the tax season. I know it can be daunting, but fear not! As an experienced QuickBooks bookkeeper and certified ProAdvisor, I'm here to provide you with a comprehensive survival guide to navigate this tax season with ease and confidence. Let's dive into the essentials you need to know and do.
2024 Tax Season Deadlines
Key Dates for Different Business Types:
Partnerships (Form 1065): Deadline - March 15
Multi-Member LLCs (Form 1065): Deadline - March 15
S-Corporations (Form 1120S): Deadline - March 15
Sole Proprietors (Schedule C on Form 1040): Deadline - April 15
Single Member LLCs (Schedule C on Form 1040): Deadline - April 15
Corporations (Form 1120): Deadline - April 15
Get Organized Checklist
Determine Required Tax Forms: Note the specific forms relevant to your business structure.
Gather Business Records: Compile all necessary financial documents.
Identify Deductions and Credits: Maximize your tax benefits.
Deduct Estimated Tax Payments: Account for any prepayments.
Request an Extension if Needed: Don't hesitate to ask for more time if required.
Plan for Federal Tax Obligation: Be prepared for what you owe.
File Your Taxes: Ensure timely submission.
Review Your Tax Forms: Double-check for accuracy and completeness.
Tax Business Forms Guide
Filing Tips for Various Business Entities:
Sole Proprietors:
Note that you’re automatically treated as a sole proprietor if you don’t elect another status.
How to file: Report all business income on Schedule C of your personal tax return. using IRS Form 1040 and your social security number. Use Schedule C on your personal tax return (Form 1040).
Before you fill out form 1040 you’ll need:
The IRS’s instructions for Schedule C
Your SSN (Social Security Number)
Your EIN (Employer Identification Number)—if you have one
An income statement for the tax year
Your balance sheet for the year
Receipts or statements for any business purchases—including smaller items like food expenses and big-ticket items like equipment, cars, or buildings
An inventory count and valuation (if you sell products)
Mileage records
Filing as a C corporation?
File IRS Form 8832 to confirm your tax status.
How to file: Report all business income on IRS Form 1120. That income will be taxed at the corporate rate. Keep in mind: Any dividends or salary you earn from your SMLLC will also be taxed as personal income on IRS Form 1040. For this reason, single member LLCs rarely elect to file as C corporations.
Filing as an S corporation?
An S corporation is a pass-through entity, so you’ll pay your personal tax rate on all business income, and you don’t need to file self-employment tax like you normally would when filing as a sole prop. self-employment tax. If you are filing as an S corporation, file IRS Form 2553 to confirm your tax status, then report all business income on IRS Form 1120S.
Before you fill out form 1120S you'll need:
General information about your business, including your date of incorporation and the date you elected S-corp status
Your business activity code and your Employer Identification Number (EIN)
A profit and loss statement and a balance sheet for your business
Information about any payments you made to independent contractors totaling at least $600 for the year (each of whom you should have sent a 1099 form)
Filing as a single member LLC?
By default, your single member LLC is taxed as a sole proprietorship. In that case, the IRS treats your LLC as a disregarded entity. That means that, even though it’s legally a separate entity from your person, you and your small business are one and the same for income tax purposes and file the same income tax return.
However, you can also elect to file using the rules for a C corporation or an S corporation. Then you would need to complete a separate corporate income tax return.
Bookkeeping Checklist
Record Every Transaction: Ensure completeness of your financial records.
Make Adjusting Journal Entries: Account for depreciation and amortization.
Separate Personal and Business Expenses: Avoid confusion and errors.
Categorize Transactions Correctly: Ensure accurate taxable income.
Reconcile Bank and Credit Card Accounts: Match your records with bank statements.
Tax Preparation Checklist
Gather All Financial Statements: Income statements, balance sheets, bank statements, etc.
Document Business Mileage and Home Office Use: Keep detailed records for deductions.
Organize Receipts for Business Purchases: Include cash and credit card purchases.
Prepare Payroll Statements: Essential for businesses with employees.
Review Previous Year's Tax Return: Useful for reference and consistency.
Check Your List Twice: Key Deductions to Focus On
In the midst of tax preparation, there are specific areas where you need to be extra vigilant. Ensuring accuracy in these categories is crucial, as they are often scrutinized and can significantly impact your tax liabilities. Here's what you need to double-check:
1. Business Mileage:
Maximize Your Deductions: If you use your vehicle for business, you're entitled to deduct the mileage. However, it's essential to differentiate strictly business-related travel from personal or mixed-use trips. Accurate tracking and documentation are key to claiming this deduction correctly.
2. Home Office Deduction:
Designate Your Workspace: For those of you using a part of your home exclusively for business, you can claim the home office deduction. Be precise in defining this space, as the IRS often scrutinizes these claims. Inaccurate claims can lead to audits, so ensure your documentation is clear and accurate.
3. Travel and Entertainment Deductions:
Separate Business and Pleasure: Business travel and client entertainment expenses are deductible. However, if your travel or entertainment mixes business with personal activities, it's crucial to separate these costs accurately. Only the business-related expenses are deductible, and proper documentation is vital.
4. Charitable Contribution Deduction:
Document Your Generosity: If your business has made charitable contributions, these can be deducted. However, be meticulous with your records. Charitable contributions are another area that can trigger IRS audits, so ensure your documentation is thorough and accurate.
Wrapping Up Your Tax Preparations
As you finalize your tax preparations, remember that accuracy and thorough documentation are your best defenses against any potential issues. By paying close attention to these key areas, you can maximize your deductions while staying compliant with tax regulations.
Tax Season Resources & Planners
IRS Where’s My Refund: Track your refund status. In general, you can expect to get your tax refund 3-4 weeks after filing your return. You can check your IRS refund status in five minutes by using this tool.
Extension Forms: IRS Form 7004 for businesses, Form 4868 for individuals.
Do's and Don'ts for a Smooth Tax Season
Do's:
Organize and securely store tax documents.
Prepare and file taxes truthfully.
Request extensions proactively.
Seek professional help when needed.
Don'ts:
Procrastinate on tax preparations.
Avoid filing due to payment concerns.
Submit inaccurate tax returns.
Guess on deductions and filing requirements.
Imagine a Stress-Free Tax Season
Picture this: You've confidently completed and submitted your tax return. Your books are in order, taxes filed, and a sense of relief washes over you. Want to make this a reality? Contact us today, and let's make tax season a breeze for your business!
