Tax Season Is Here - Part 4 - Due Dates for Tax Forms

The clock is ticking to file your tax forms!

January 29 was the official start date to start filing your taxes! You had everything ready ahead of time and submitted it, right? No? If not, then it may be helpful to know when your forms need to be filed. The following is a list of the deadlines due dates for filing the 2023 business and/or personal tax forms:

January 31, 2024 (Wednesday)

February 15, 2024 (Thursday)

March 15, 2024 (Friday)

This is the big day for many LLCs and S-Corporations as the annual return or an extension must be filed. If you’re like many business owners, you may not be ready to file your taxes yet, but you can request an extension with a Form 7004.

April 15, 2024 (Monday)

This is when tax filings for individuals are due, but also the day when sole proprietors and single member LLCs must file. If you filed or you’re filing an extension, you’ll still need to pay your estimated taxes by April 15 to avoid paying interest.

September 16, 2024 (Monday)

If you filed an extension earlier in the year, this is when Partnerships and S-Corporations must file or face pemalties and interest.

  • Form 1065 - Annual Tax Return for Partnerships (LLCs with multiple members, LLPs)

  • Form 1120-S - Annual Tax Return for S-Corporations

October 15, 2024 (Tuesday)

If you filed an extension earlier in the year, the time has come for Individuals, Sole Proprietors, and single member LLCs to file. If you miss this date, your return will be considered late by the IRS, which means penalties and interest will start to be added.

December 31 (Tuesday)

  • 401(k) contributions deadline for 2024

  • Charitable donations deadline for 2024

Hopefully you’ve got your accounts in good shape and are on track to file all of the required forms. If not, Brightleaf is happy to help you with your accounting and bookkeeping, get your numbers accurate, help you understand what you need to fine and with whom, and get you ready for your future plans!

- John Thrush

Tax Season Is Here - Part 3 - Organizing Business Expenses

Looking for receipts and invoices can take up precious time…

As tax season approaches, one of the key responsibilities for business owners and managers is organizing company expenses. Documenting these expenses is important for tax preparation but also for making sure the company’s finances are accurate. Here are some suggestions for organizing your business expenses to make tax season more manageable and easier.

The foundation of effective expense organization is maintaining detailed records. Creating a dedicated system to track all business-related expenses including your receipts and any supporting documents. It’s easier than ever to keep current by using expense tracking apps on your phone that can integrate with your accounting software. QuickBooks, Xero, and other accounting software also let you store images of receipts or invoices with the individual records so you can refer back to them. Another basic system to manage expenses is to write notes on the receipt, take a picture of it, and email the picture to yourself or your bookkeeper to review later. Such a system doesn’t have to be complicated, but it should be consistent to avoid missing valuable deductions.

One of the best ways to simplify keeping records is to use a business bank card or account for business expenses rather than using personal funds and getting reimbursements. This takes the guesswork out of whether the purchase was for work or personal and also prevents taking the time to move money from one account to another.

Once you have your expenses recorded, you’ll want to group them into categories to have a clear and organized overview. Categories include:

  • Office Supplies and Expenses

  • Marketing and Advertising

  • Professional Services (e.g., legal, accounting)

  • Rent or Lease

  • Repairs and Maintenance

  • Travel

  • Meals and Entertainment

  • Utilities

It’s important to understand the tax regulations and guidelines to determine which expenses are deductible as this may change a company’s spending. For instance, the IRS says a company can “deduct no more than $25 of the cost of business gifts you give directly or indirectly to each person during your tax year”. Another example is how tax laws were changed temporarily to allow 100% of business meal expenses to be tax deductible. This changed back to 50% in 2022; however, some managers and owners didn’t understand this and continued to attempt to deduct the full expense. Knowing these things can change how a company spends its money to  maximize deductions and comply with tax laws.

Organizing business expenses for tax preparation is a proactive approach that not only facilitates a smoother tax season but also contributes to overall financial management. By creating a standard process and leveraging technology, you can increase consistency, reduce the risk of errors, and ensure compliance with tax regulations. If you aren’t sure how to do this yourself or need help in coming up with a system or need help doing the work, Brightleaf is happy to partner with you to make that happen! Stay organized, stay informed, and make tax season a stress-free experience for your business!

- John Thrush

Tax Season Is Here - Part 2 - Annual Reports, Taxes/Fees as well as S-Elections

It’s hard to believe that we’re almost three weeks into the New Year. Things are moving quickly and tax time will be here before you know it!

Last week we talked about making sure you get your 1099 forms filed on time.This week we’re focusing on making sure your company’s annual reports and/or annual tax/fee are filed and paid. The requirements vary by the state, but most states require LLCs and corporations to file an annual report and a fee or tax with the Secretary of State. Some states (e.g., New York, New Mexico, Indiana, Alaska, Iowa, Nebraska, Washington D.C.) require filing only every two years. One state, Ohio, does not require annual reports for most companies. Another state, Pennsylvania, used to require filing every 10 years, but will now require annual reporting starting in 2025. Most other states (e.g., North Carolina, Delaware, Nevada, Tennessee, Florida, etc) require annual reports and allow filing and payment online.

In many states, the annual report and/or fee are due by April 15; however, some are due earlier while others base it around the date your company was officially formed. You should check the rules for your state to know for sure. Regardless, it makes little sense to wait for a deadline and it’s easier to pay it now and be done with it!

Another deadline that’s worth knowing is when LLCs can choose to be taxed as an S corporation. Many people choose to form an LLC for their business because they’re simple to start and can, when owned by an individual, file taxes on a Schedule C just like a sole proprietorship. The downside is that all income is subject to self employment taxes. As an LLC grows and gets employees, it may make more sense to shift to an S corporation to reduce the tax burden. For existing businesses, this change can be made before the first 2 months and 15 days of the current tax year for which you want it to take effect. This means there are still about 7 weeks to make this decision.

While lower taxation sounds attractive, it does come with some requirements which may change how you’re currently doing business and may increase your costs. The first big requirement is that everyone, even owners, are paid as employees. If the company already has employees, this means adding the owners as W-2 employees. If the company just uses contractors and owners just take money from the company as needed, it may help to work with a payroll company to make sure things are done properly and reported correctly to the IRS.

Some owners may choose to not pay themselves in an LLC, but the IRS states that S corporations must pay officers “wages to the extent the amounts are reasonable compensation for services rendered to the corporation.” While there may be a temptation for an owner of an S corporation to choose a minimum wage to avoid taxes, the IRS is well aware of this and reacts accordingly. This is why it helps to work with companies that specialize in payroll work.

The second big requirement is that the company must file tax forms separately from the owner. If the LLC has a single owner, this means filing a Form 1120-S. For those who filed on their own, this is a bit more complicated than filing a Schedule C with their taxes and usually means using a tax preparer at somewhat higher expense. If the LLC had multiple owners already or they used a tax preparer already, it mostly means changing from one form to another.

Electing to file as an S corporation does not require changing how you’re already registered with the state. This filing is instead done with the IRS by filing a Form 2553. The tricky part is you must FAX the form to the IRS. For those without FAX machines, there are options. It is important, though, to speak with a professional to make sure that this decision is right for your company. Brightleaf would be happy to help your company see if this transition makes sense.

Tax Season Is Here - Part 1 - Filing The Right Form-1099

Which Form 1099 to file?

Happy 2024! A new year is an exciting time for business. New opportunities. New ways to help customers and clients. But this is also the time where business owners need to put things together for the previous year's taxes.

Many new business owners aren't aware that the first forms must be filed in January. The first things they'll need to file are 1099s to individuals and most companies who received at least $600 in non-employment income or other payments during the year. Types of payments include services provided, commissions, rent, interest, dividends, and other similar payments. Vendors that are incorporated (e.g, either a C-Corp or an S-Corp) will not require a 1099, but sole proprietors, independent contractors, partnerships, and most LLCs will.

1099-NEC - For Nonemployee Compensation. This is intended for contractors or other service providers who were paid for their work, but are not considered employees and who won't receive a W2 for their services. The company is required to have copies submitted to the individual or vendor paid as well as to the IRS by January 31, 2024.

1099-MISC - Used for other miscellaneous payments such as rents, prizes and awards, awards paid to an attorney, and other payments. The company is required to, in most cases, have copies submitted to the individual or vendor paid by January 31, 2024; however, if there are "substitute payments in lieu of dividends or interest" or "gross proceeds paid to an attorney, they aren't due until Feb 15, 2024. The IRS must receive their copy by February 28, 2024 if provided on paper or by April 1 if eFiled.

Those are the most common 1099 filings for businesses, but other forms include:

  • 1099-INT - For taxpayers who've earned more than $10 in interest in the tax year. Businesses that send these out are typically banks, brokerage firms, or other investment firms.

  • 1099-DIV - For taxpayers who received dividend income during the tax year, usually as cash payments paid to investors for owning stock or equity shares.

  • 1099-B - Goes to taxpayers listing transactions from a broker (e.g., sales from stocks, commodities, and other securities are the most common; however, it also includes bartered transactions through an exchange.)

  • 1099-G - Sent by local, state, and federal government to recipients of refunds or some benefits like unemployment.

  • 1099-K - Issued by payment companies, online marketplaces, or payment apps for goods or services provided during the year. A $5,000 threshold is planned for 2024.

  • 1099-PATR - These report cooperative patronage dividends and dividend payments associated with farms.

  • 1099-R - Taxpayers who receive pension distributions or payments from a taxable retirement plan or IRA will receive this form.). This can also apply to certain annuities and life insurance contracts.

  • 1099-S - Provided for real estate transactions to show realized proceeds and gains from selling commercial/residential properties or land.

  • 1099-SA - Sent to individuals who receive distributions from health or medical savings accounts as well as Medicare Advantage Accounts.

If you're a self-employed taxpayer who earned less than $600, you may not receive a 1099–NEC; however, you're still expected to report that money as income on your tax return. If you've just started a side business or you've been in business a while and some of this is new to you, please reach out to us at Brightleaf Consulting Group. We're happy to help you learn more about what's required for small businesses and put your mind at ease about what to file and when!

- John Thrush