Calling all small business owners! When tax season comes around, you must be ready to file. You want to make sure to get everything to file on time and avoid an audit.
The 2022 tax season will be a little different. There are several changes you must know about. The good news is that small business tax filing doesn’t have to be daunting if you use this cheat sheet.
Through tax planning, you can focus on filing business taxes. This is your go-to guide. Read on to learn valuable insights, tips, and resources to help you file your business’ taxes.
Consider a Tax Status Change
Small business owners can structure their business in different ways. These owners can operate as a sole proprietor or as a partnership. Some business owners choose to operate as a limited liability company (LLC).
The way an owner structures their business will impact how to file taxes. Did your business outgrow its current business structure in the past year? If you have an LLC, you might want to file as a C corporation.
Take Advantages of Tax Deductions
Make sure to take advantage of tax deductions. These can lower your tax liability. Tax deductions apply to expenses your business incurs throughout the year.
If you have been tracking expenses year-round, this process should be fast and easy. To make a tax deduction, the expense must be ordinary. It must also be necessary for your type of small business.
Leverage Coronavirus Tax Relief
As a small business owner, you may be able to receive coronavirus tax relief. Did your business keep idle workers on payroll during the pandemic? You might qualify for a tax credit that can offset wages and other costs.
Did you pay employees who were out sick with COVID-19? If this is the case, you might be able to receive a refundable tax credit.
There’s a tax credit that covers paid time off for employees who got the COVID-19 vaccine. This specific credit falls under the sick and family leave credits. This credit is available to businesses with less than 500 employees.
Do you have any questions about COVID-19 relief for your business today? Check out the ERC program erctoday.com to learn more.
You can elect to defer income. Let’s say you did work for a client in December 2021. If you didn’t bill the client for the services, you can wait until January 2022 to invoice your client.
Then you can defer the income to the following year. This way you can lower your 2021 tax bill.
You can also seek to accelerate income into this year. It can make sense to do this if you believe tax rates will increase soon.
You can collect payment from a client in December 2021. This way, more of your income will be taxed at your current tax rate.
Now Is the Time to Focus on Small Business Tax Filing
Use this small business tax filing guide to help you. It tells you what you need to know about the 2022 tax season. It’ll help you file your small business tax returns with ease.