Business Tax Tips for Procrastinators
Even last-minute filers and planners can benefit from some tax savings tips. Going through your return too quickly can result in silly mistakes that can trigger costly errors or even an audit down the road. You can use these tax tips to help you avoid making silly mistakes and save a few dollars even if you are getting your tax return filed at the last possible moment.
1. Know your deadlines and request an extension if necessary.
Many small business owners who are procrastinators end up missing their deadlines altogether. However, missing the tax filing deadline can cost you in penalties and interest. Instead, be aware of the deadlines you need to meet to file and pay your taxes or make sure that you request an extension as you need it.
Your filing deadlines will vary depending on the type of business that you have. For example, a sole proprietorship’s deadline is the same as the individual tax filing deadline—April 15, 2020. However, if you are operating an S corporation or a partnership, then your tax return is due by March 16, 2020. Knowing these deadlines ahead of time can help you plan effectively.
If you filed for an extension, then your deadline will be moved to September or October, depending on the type of legal entity that you are running. However, you need to make this request before your normal deadline for it to be effective. Keep in mind, however, that the extension only changes your date to file your taxes; it does not change your tax obligation due date. You can avoid paying tax penalties of up to 25% by making these tax payments on time.
2. Double-check your numbers and vital information.
If you are going through your tax return quickly or gather information too fast to send to your tax professional, you are more likely to make a mistake. Double-check the information that you are providing to ensure that you do not have a silly error. Taking an extra five minutes to complete this step can be the difference between an income tax refund and an amount due.
3. Make your new estimated tax payment for 2020.
Keep in mind that even as you are finishing up your 2019 tax obligations, you are still required to make estimated tax payments for the first quarter of your 2020 income taxes. This obligation can be easy to miss if you are focused on paying an amount due for tax year 2019.
4. Take advantage of end-of-the-year expenses and charitable giving.
If you are still at the end of the fiscal year, take the time to stock up on things that you will likely need to purchase later in the year, such as office supplies or equipment. These last-minute purchases can still be expensed and decrease your tax obligation if you make them within your fiscal year.
You can also take advantage of tax deductions for charitable giving even at the end of the tax year. In most situations, you still have to be sure that your dollars leave the company before December 31, each tax year, however.
5. Boost retirement savings.
Even as a business owner, you can expense your retirement savings on your individual tax return (and sometimes as a business expense). You can contribute up to $6,000 in your individual IRA up until April 15, 2020, and count that contribution toward your 2019 limitation.
This tax savings vehicle is one of the only methods that you can use to decrease your tax obligations after the end of the calendar year.
6. Keep good records throughout the year.
Even if you wait until the last minute to file your tax return, you can still decrease your overall tax obligations if you keep up with your recordkeeping and accounting obligations throughout the year. Tracking expenses and income as you go is one of the best ways to ensure that you have taken advantage of every tax deduction and credit that you or your company is entitled to receive.