Business taxes may seem like the best thing to look forward to in 2020, but taking time to get organized and sorted now can save business owners a lot of headaches in the new year.
Assess Your Business Liabilities
The deadline for 2019’s quarterly tax year is on January 15, 2020. Businesses must pay 100 percent of the previous year’s liabilities and 90 percent of the current year’s income taxes to avoid heavy penalties from the IRS. Business taxes in the form of IRS liabilities are different, depending on the size and type of organization you run. Businesses making fourth-quarter tax payments in January need to calculate taxes separately, especially if capital gains benefits are involved.
Estimated Business Taxes
Making four estimated business tax payments is often easier than making one large payment. Estimated business taxes are calculated by figuring out taxable income, deductions, credits, adjusted gross income, and other items. Paying estimated business taxes can help to make things easier throughout the year, especially if your business has started handling taxes for new employees.
Keep Track of Expenses
Recent tax reforms now hold that businesses can only claim 50 percent deductions for meal and entertainment expenses. Previously, businesses could claim 100 percent deductions, so be aware of this when filing in 2020. When filing business taxes, keeping track of your deductible expenses such as meals, travel, equipment, and more makes the process much easier.
There are a number of new deductions for business owners who pass through a sole proprietorship. Qualifying business owners will be able to deduct up to 20 percent of their qualifying business income. The pass-through status does not apply to doctors, attorneys, athletes, or dentists.
Talk with Your CPA
If you enlist the services of a CPA, they will be able to keep you apprised of the latest reforms for business taxes, and how they will impact your quarterly or yearly payments. Talking with your CPA can help you streamline the tax filing process so you can focus on running and growing your business without staying up late with a headache and a calculator.