Note: there is a lot of misinformation floating around the web regarding these changes. If you’re not talking to a trusted Acuity advisor, we recommend sticking to IRS.gov, SBA.gov or AICPA.org for the most up-to-date, accurate tax prep information.
Taxes for small businesses and startups can make or break a company’s ability to make a profit, grow and, in some cases, survive. Due to this year’s tax filing deadline accelerations, small businesses need to be more proactive than ever to avoid costly, last-minute mistakes. Whether you’re working with a bookkeeper or are navigating your business tax prep solo, here’s exactly what you need to know heading into the 2017 filing season.
Calling all tax procrastinators – not this year!
For all of our bootstrappers and entrepreneurs filing an LLC, S Corporation or Partnership tax return – do not leave your tax prep to the last minute this year. If you haven’t heard, the IRS recently announced a major change to the United States’ tax season and filing deadlines. Thanks to The Protecting Americans from Tax Hikes (PATH) Act and The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, most small businesses will have 30 days less to file their 2016 return in the 2017 filing season.
Earlier Deadlines for 2016 Partnership & LLC Tax Returns
For years, the filing deadline for partnership federal income tax returns via Form 1065 was April 15 (*adjusted for weekends and holidays*). This year, the deadline for partnerships and limited liability companies (LLCs) functioning as partnerships for federal tax purposes is March 15, a full thirty days sooner than previous deadlines.
Later Deadlines for 2016 Corporate Federal Income Tax Returns
Bootstrappers aren’t the only ones facing new due dates. For C corporations filing federal income tax returns, the deadline for Form 1120 is now April 15, giving you a full thirty days more for tax prep. If you need more time, be sure to file Form 7004 for an automatic extension.
Earlier Deadlines for Forms 1099-MISC and W-2
Before last year, forms 1099-MISC and W-2 were required to be filed by the last day of February (or March 31 if filed electronically). This year, the deadlines have been accelerated and the March 31st extension is no longer available. 2016 Forms 1099-MISC and W-2 must be filed with the IRS and SSA by January 31st, 2017. A 30-day extension is possible if you file Form 8809 no later than the January 31.
2016 Tax Prep – Be Prepared for Effects of Changes
Don’t forget, these changes won’t just affect you and your business. Tax professionals around the country may be facing adjustments and service issues with less-than-proactive clients. To file without an extension, we recommend getting completely organized and sending your CPA everything he/she needs as soon as possible to beat the last-minute rush.
Regardless of business type, be sure to set aside some time (sooner rather than later) to think through your 2016 tax return strategy. It’s possible that these changes will affect other business agreements triggered by tax filing deadlines. Make a list of anything your deadline is tied to administratively and make a plan of action. For most startups and small businesses, you’ll be closing your books a full thirty days sooner than you have historically. For small businesses that push their tax prep to the very last minute – this might be the year to change your tune.
For an exhaustive list of original and extended tax return due dates, check out AICPA’s awesome resource. Regardless of who you choose to satisfy your CPA needs, clean books are the key to getting your taxes done correctly and quickly. If you need help navigating your books in 2017, Acuity’s bookkeeping services might be for you – learn more here.