Tax

8 Steps You Can Take Now to Prepare Your Personal and Business Taxes

By February 26, 2019 No Comments

business taxes

It’s that time of year again: tax season. While it may seem like 2019 just got started, now is a good time to think about your personal and business taxes.

Here are eight steps you can take now, so you and your company are prepared.

1. Confirm your tax deadline.

Personal and business tax deadlines differ, so it’s important to note in advance which deadlines apply to you.

Personal income tax returns for 2018 are due on April 15, 2019, using Form 1040. If you are self-employed, that’s also your deadline to submit estimated tax payments for the first quarter of 2019 using Form 1040-ES. The other quarterly deadlines for estimated 2019 taxes are:

  • 2nd quarter: June 15, 2019
  • 3rd quarter: September 15, 2019
  • 4th quarter: January 15, 2020

Here are the tax deadlines and IRS forms for different business entities:

  • Partnerships and multiple-member LLCs (Form 1065): March 15, 2019
  • S corporations (Form 1120S): March 15, 2019
  • C corporations (Form 1120): April 15, 2019
  • Sole proprietors and single-member LLCs (Form 1040): April 15, 2019

2. File an extension if needed.

Midnight on April 15, 2019, is the deadline to file for an extension on your personal taxes using Form 4868. That will push your filing deadline to October 15. You may also need to file for a separate extension on your state tax returns, so check the laws in your state.

Businesses must request an extension by their respective deadlines above. Here are the forms you need, and the new deadlines if you’re granted an extension:

  • Partnerships, multiple-member LLCs, and S corporations (Form 7004): September 16, 2019
  • C corporations (Form 7004): October 15, 2019
  • Sole proprietors and single-member LLCs (Form 4868): October 15, 2019

An important note about extensions: Even if you get an extension to file your returns, you still need to pay your estimated taxes before the March 15 or April 15 deadline. You will need to estimate your tax liability and pay that amount when you submit your request for an extension.

3. Distinguish whether you’re an independent contractor or employee.

It’s important to confirm whether you’re an employee or an independent contractor. If you run a business, you also need to confirm the status of those working for you. To give you a general idea, an employer must withhold income taxes and pay Social Security and Medicare taxes on wages paid to an employee.

If you are an independent contractor who earned more than $600 from a business, they will need you to complete Form W-9. They will then give you a Form 1099 to use when filing your personal income taxes.

4. Understand your tax deductions.

Understanding your tax deductions can make a huge difference in your returns. However, due to the new Tax Cuts and Jobs Act, deductions have become more complicated, and experts are still interpreting its implications. How this law might impact you and your business varies, so it’s best to speak with an expert.

Here are some resources on tax deductions for:

5. Find out if you qualify for Founder Stock exclusions.

With Founder Stock, you get an income tax exclusion on gains of up to $10 million when you sell qualified stock. Learn more about Founder Stock here.

6. Pay your taxes (yes, now).

You don’t have to wait until the deadline to file your taxes. Getting them out of the way can bring you peace of mind sooner, and you’ll likely see any refunds faster if you file earlier.

You have several options when you’re ready to pay your taxes. You can pay online yourself, or print and mail the forms to the IRS address in your state. You can also hire an expert like Acuity to file for you.

7. Keep your tax records.

The IRS generally recommends keeping your tax records for three years unless certain situations apply to you. This includes receipts and any forms used in your tax return.

8. Bundle your tax and bookkeeping services.

Keeping your finances in order can be stressful, especially during tax time. To streamline the process, hire an expert to handle both your tax and bookkeeping services. This helps maximize your tax savings by giving you more personalized service than with two different providers.

Acuity is your one-stop shop for tax and bookkeeping services. If you need help with your personal or business tax returns, learn more about our tax services here.