What small businesses need to know before filing tax returns
Thursday, March 12, 2020
The deadlines for businesses to file 2019 tax returns are near. S corporations and partnerships have a filing deadline of March 16. Sole proprietorships and individuals have an April 15 deadline to file. However, the coronavirus outbreak may allow for some extensions, the Treasury Department announced Wednesday.
What if S corporations or partnerships cannot file tax returns by March 16? In that case, it is vital to request an automatic six-month extension before that date, Anne Zimmerman, a CPA based in Cincinnati, Ohio, told MultiBriefs in a phone interview.
What does the Tax Cuts and Jobs Act of 2017, perhaps President Trump’s signature legislative achievement, mean for businesses? We turn to the Urban-Brookings Tax Policy Center (TPC), located in Washington, D.C.
“TCJA allowed businesses to deduct the full cost of qualified new investments in the year those investments are made (referred to as 100 percent bonus depreciation or ‘full expensing') for five years,” according to the TPC. But this is not a permanent change to the tax code.
“Bonus depreciation then phases down in 20 percentage point increments beginning in 2023, and is fully eliminated after 2026.” (In contrast, the TCJA’s corporate tax cuts of 40% are permanent.)
According to the TPC, there are bright spots for businesses in the TCJA. “TCJA doubled the Section 179 expensing limit for investments by small businesses from $500,000 to $1,000,000 for qualified property (sometimes called ‘small business expensing’).”
In the meantime, a California law that Lorena Gonzalez, a San Diego Democratic Assemblywoman, introduced has national impacts for classifying workers as company employees or self-employed independent contractors. That matters to businesses in and out of the Golden State in terms of filing tax returns.
If in doubt how to classify workers providing labor services, which has been an issue for decades, see IRS Form SS-8, according to Zimmerman, who is also co-chair of Businesses for Responsible Tax Reform, a coalition of small business groups.
Keeping accurate records helps businesses file accurate tax returns. In business, accuracy is a bottom-line issue for employers of all sectors and sizes. If by chance your 2019 business records are less than accurate, do not despair. Try to go back and reconstruct them by using calendars and notes to match receipts, meetings and miles driven, according to Zimmerman. There may be a wealth of such information at your fingertips to facilitate tax filings.
Meanwhile, the coronavirus, or COVID-19, is a global pandemic now, according to the World Health Organization, a United Nations agency.The WHO Director-General’s COVID-19 pandemic declaration, by definition, sets into motion big changes, economically and politically.
Businesses, governments and public institutions are taking steps to prevent the spread of the disease, such as cancelling public events, closing schools and cutting travel.
On that note, COVID-19 could slow down processing of business tax return filings, Zimmerman said. At this point, that outcome appears to be one that will be hard to avoid, given the nature of quarantines to the mobility of businesses, their workers and the customers they serve.
- 10 negative employee behaviors that undermine success
- Millions of high school students set for success: Celebrating Career and Technical Education Month
- The stress of 911 call-takers and emergency dispatchers
- Selling your business? What tenants need to know about their lease
- Will kids affected by the digital divide be ready for next school year?
- To fight crime, engage kids in quality after-school programs
- 7 key elements of an effective new employee orientation program
- 101 bad business buzzwords — and why you should avoid them
- Finnish researchers create pendant necklace can detect abnormal heart rhythms
- Report: Ranking the states ready for the future digital economy
- Fewer beach cleanups and more awe for World Oceans Day 2020
- How the pandemic presents opportunities for association improvement
- As many struggle, some small businesses are thriving during COVID-19
See your work in future editions
Your content, Your Expertise,
Your Industry Needs YOUR Expert Voice & We've got the platform you needFind Out How