Taxes are due soon, which means it’s time to make sure you’re well-prepared! If you’re not sure where to start, or just need a little guidance, check out these tips:
Get organized. Review your financial records, including a thorough list of deductions, as soon as possible. Whether you file your own taxes or enlist the help of a professional, start now to ensure that all 2018 data is comprehensive, balanced, and up to date. Last-minute inaccuracies may take time to resolve and could bring on additional costs, delayed refunds, and/or penalties.
Get up to speed. Familiarize yourself with the most recent updates to the tax laws — at least as much as possible. Here are some of the new Tax Cuts and Jobs Act (TCJA) changes that may affect your small business.
- Deductions: Entertainment, amusement, recreation expenses, and dues for club memberships can no longer be claimed as deductions. Cash, gift cards, and other non-tangible personal property given as employee achievement awards are now prohibited under the new law. You may still continue to deduct 50% of the cost of business meals as long as you or one of your employees is present.
- Depreciation: Business equipment and buildings used to be depreciated over time, but now 100% of their cost can be deducted during the first year of service after September 27, 2017 and prior to January 1, 2023.
- Moving Expenses: An employee’s moving expenses are now subject to income and employment taxes and must be included as part of an employee’s wages.
- Family and Medical Leave: If your business offers paid family and medical leave, you can now claim a tax credit for leave wages paid prior to January 1, 2020.
File forms for your employees and contract workers. For each employee, you must file a Form W-2 (Copy “A”) and Form W-3 (Transmittal of Wage and Tax Statements) to the Social Security Administration. For independent contractors and freelancers who receive at least $10 in royalties or broker payments, or $600 or more in rent or Non-Employee Compensation (NEC), you must file a Form 1099. This form is also used for donations of $5,000 or more. All of these forms (W-2s, W-3s, and 1099s) must be filed by the end of January 2019.
Be on time. Business taxes are due earlier than individual returns. The deadline to submit 2018 business tax returns or to submit a request for a filing extension is March 15, 2019. (Schedule Cs for sole proprietorships can still be filed on April 15, 2019 with your individual tax return.)
Look ahead. See how new tax laws for 2019 will affect your small business. The standard mileage rate is increasing from 54.5 to 58 cents per mile. Also, if you are self-employed, you will need to pay self-employment tax on 2019 net earnings up to $132,900, up from $128,400 in 2018.