The most dreaded time of the year: Tax season. As a small business owner, taxes work a bit differently than they do for for private citizens — and for corporations. Chances are, your business is considered a “flow-through entity,” meaning the taxes paid on your business are tied to the income you made. Nonetheless, there are different tax dates and possible deductions to keep in mind.
If you aren’t sure if you have time to file taxes when these dates come around, the good news is you may be able to get an extension on them. Wondering if the tax extension is right for your small business in 2018? Continue reading to see how it may affect your business.
First, the Due Dates to Keep in Mind
Depending on the type and structure of small business you owe, the dates on which taxes are due could vary wildly. Here are some of the most common types of small businesses, and the dates to keep in mind:
- S corporation returns on Form 1120 S: March 15, 2018
- Partnership returns on Form 1065 with Schedule K-1s: March 15, 2018
- C corporation returns on Form 1120: for December 31 year-end corporations, the deadline is April 17, 2018.
- Sole Proprietorship and Single-member LLC returns on Schedule C: April 17, 2018
If this is your first year of paying taxes on your small business, and have no idea which of these applies to you, it’s important to check the paperwork you filed with the government to start your business. You can also check with your accountant to make sure you’re on track with your taxes, and that you’re using the right forms.
Now, the Extension Dates
If you need an extension, there is still time to file these next year. However, the date to file for an extension for sole proprietors and single-member LLCs was on October 16, 2017. For other types of businesses, these are the dates to keep in mind:
- Partnership extension deadline: September 17, 2018
- S corporation extension deadline: September 17, 2018
Note that filing for an extension does not give you more time to pay your taxes. That means you can still incur late fees and other fines if you miss payments. As such, it may be a good idea to include a payment with your extension filing. However, if you are simply too busy to organize everything during tax time, you can give yourself more time to get your paperwork in order. The good news is, there’s no statistical evidence that filing for an extension does not lead to a greater chance of being audited. You also don’t have to give a reason to get an extension; you simply need to meet the deadline.
Possible Deductions to Keep in Mind
Before we get into the possible deductions you could use for your small business, we need to say: Always talk to your accountant before filing your paperwork. While some of these may seem like they would benefit your business, others may do much more harm than good. In fact, taking some of these deductions improperly could lead to an audit of your business.
That’s not to say you shouldn’t take deductions; they can be a lifesaver during tax season. But, as we said, ALWAYS check with your accountant beforehand! Also, know that these deductions may change if the most recent tax bill passes through Congress.
- Your automobiles: Chances are, you use your car or truck as part of your business. You can deduct some of the operating expenses associated with your vehicle — as long as you keep track of these expenses. There are apps you can use to automatically track mileage, record gas and maintenance expenses, etc.
- Contract labor: One of the ways Uber and Lyft make money is by deducting the cost of contract labor on their taxes. You can do that, too. If you pay any contractor more than $600, you can deduct it.
- Wages and salary: No, you can’t deduct the money you pay yourself or other partners for running your business. But, if you have employees, the salaries and wages you pay them can be deductible.
- Rental property, supplies and utilities: In general, the cost of renting a space, the supplies you need for your business, and your utilities. If you run your business from your home, your landline is not deductible, unless you have a separate line specifically for your business.
- Insurance: For the most part, the cost of insurance for your business in general (malpractice, business continuation, etc.) are deductible. Your small business may also qualify to deduct up to 50% of of healthcare premiums. Speak with your accountant about this deduction to make sure you get it right.
- Travel: Good news if you travel for work: If you keep track of your expenses, the cost of transportation and lodging can be deducted. Keep in mind, however, that car rentals and other local commuting expenses are generally not deductible.
- Legal, accounting and advertising fees: While we’re talking about accountants, the fees you pay to these professionals are deductible. Ordinary advertising and legal fees are also fully deductible.
- Entertainment and meals: Keep track of your receipts when you have business lunches or other entertainment events. You can deduct up to half of these costs, as long as you can substantiate the expense.
Keep Track of It All with Company.com
We know taxes are stressful. That’s why we’re here to help you. Company.com has partnered with FreshBooks to provide a fast, easy, effective way for small business owners to track their expenses, organize receipts and make sure their books are ready for the IRS. Contact us today to learn more about how we can help keep your business growing, and to start a free trial of our premium software suite.