Understanding your taxes can be stressful and time-consuming, especially when mistakes can present a significant financial risk to you or your business. Our years of experience mean we can notice mistakes that could negatively impact your future. We may also see opportunities and make suggestions to improve your financial situation. Stay in control and reclaim your time by working with a Padgett tax professional during the year.
Proactively Organize Financial Documents and Business Records
Proactive organization is one of the keys to making tax season as smooth as possible for small businesses. You should carefully gather and prepare all relevant financial documents and business records. The more information you have, the better position you will be in to know—and minimize—your federal and state tax liability.
Know the Tax Deadline for Your Type of Business
You probably have the date “April 15th” in your head as the federal tax deadline. However, that is not actually the deadline for many small businesses. There are a few key tax deadlines that small business owners should be aware of. Here is an overview:
Be Ready to Consult With Tax Advisors for Small Businesses
You do not have to navigate your tax obligations alone. An experienced tax advisor for small businesses can review your situation, help gather relevant documents and records, complete and file the tax forms, and take action to ensure that your financial interests are fully protected every step of the way.
Tax rates for businesses changed significantly in 2018. At that time, the Tax Cuts and Jobs Act (TCJA) took effect. The federal law created a flat, 21 percent tax rate for all corporate income. Prior to the law, the U.S. federal corporate tax rate was between 15 and 38 percent—gradually increasing with the taxable income of the business.
As explained by the Social Security Administration (SSA), FICA stands for the Federal Insurance Contributions Act. It is a payroll tax deducted from employee wages that fund Social Security and Medicare. An employer—including a small business—is responsible for withholding the employee’s share of the FICA contribution and paying the employer’s share of this tax.
The Internal Revenue Service (IRS) explains that FUTA is the Federal Unemployment Tax Act. It is the employer who is responsible for paying this tax. Indeed, employers pay the FUTA. Small businesses that have employees must ensure that they have accounted for the FUTA.
Small businesses should understand their responsibilities regarding EINs. The IRS explains that an EIN is an Employer Identification Number. Also sometimes referred to as a federal tax ID number, an Employer Identification Number is used to identify a specific company. Like an individual’s Social Security number (SSN), an EIN is nine digits long. Many small businesses must obtain an EIN to be in compliance with federal tax regulations. You should get an EIN if any of the following apply to your small business:
At Padgett, we provide reliable, cost-effective tax planning for small businesses. If you have any specific questions or concerns about small business taxes, we are here to help. Contact us today to set up a confidential appointment with a small business tax professional. We have offices around the country to ensure that you have access to a tax advisor near your business.