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What to Prepare for Tax Filing in 2024?


What to Prepare for Tax Filing in 2024?

Running a business can be tough, but doing your taxes doesn’t need to add to the stress. Between finding good staff and keeping things running smoothly, it's tough to find time for accounting. But if you stay organized for tax filing in 2024, it won't be such a headache.


This checklist for preparing business taxes can save you time. Instead of dealing with complicated state tax, sales tax, and employment problems, you can focus on your business performance.


Make a Tax Filing Calendar for 2024


It’s common to forget tax deadlines, but it's crucial to remember when taxes are due and when to file them. The IRS doesn't tolerate late payments. To manage your business finances well, make a tax calendar.


Here are the important tax dates for microenterprises in 2024:


January 15, 2024

  • 2023 Fourth quarter estimated tax payment due.

January 31, 2024 

  • Deadline for W-2s to your employees and 1099s to independent contractors.

  • The final day of tax document submission to the IRS.

February 28, 2024

  • Deadline for 1099 or 1096 submission for companies.

March 15, 2024

  • Filing of annual tax returns for partnerships, S Corporations, and multi-member LLCs.

April 15, 2024

  • First quarter estimated tax payment due.

April 18, 2024

  • Single-member LLCs, sole proprietors, and C corporations (that follow the standard calendar year for accounting) must file their yearly tax return by this date.

June 17, 2024

  • Second quarter estimated tax payment due.

September 16, 2024

  • Third quarter estimated tax payment due.

  • Deadline of tax returns for partnerships, S Corporations, and multi-member LLCs who were granted an extension.

October 15, 2024

  • Deadline for extended filing of returns for single-member LLCs, sole proprietors, and C Corporations

January 15, 2025

  • Due for 2024 fourth quarter estimated tax payment.


If a date is on a weekend or holiday, you need to make returns and payments on the next workday.


Recognize Tax Forms


These are a few IRS forms you might need to report taxes. For a detailed list, you can visit the IRS website.


  • Schedule C – As a single proprietor, report your income along with Form 1040

  • Schedule K-1 - S Corporations or partnerships use this form to report income

  • 1099-MISC - Report rental income to landlords or payments to attorneys

  • 1099-NEC - reporting non-employee compensation.

  • Form 1120 - For C corporations

  • Form 1120-S - For S corporations, it’s filed separately from personal income tax returns.

  • Form 1065 - For owners of partnerships, it’s filed separately from personal income tax return.

  • Form 720 - This is for reporting excise taxes related to business.


Collect Required Documents for Your Business Tax Return


Here's a summary of the tax documents a business needs to complete before filing:


1. Basics

  • Federal Tax ID number

  • Social Security number

  • Previous year’s tax return (Bring tax returns from the last three years for both state and federal taxes.)


2. Business Income Taxes:

  • Accounting journals and ledgers

  • Balance sheet and income statement

  • Transactional supporting documents

  • Proof of bank deposits

  • Bank account statements

  • Invoices received and paid

  • Checkbook

  • Credit card statements

  • Vehicle and mileage logs


3. Enterprise Costs

  • Office Supplies

  • Operational Expenses (rent, electricity, and subscriptions)

  • Business-related Travels and Events

  • Marketing and Advertising Expenses

  • Professional Services

  • Insurance Information

  • Equipment and Assets (include depreciation cost for each item owned)


Understand Business Tax Types


Every business must pay taxes to the IRS and state tax offices. Depending on your business type, there are five main taxes you might need to pay.


1. Income Taxes


Income taxes are what your business owes based on its earnings, and you pay them to both the federal and state governments. How much you owe depends on how your business is structured. C Corporations face double taxation, meaning they pay taxes twice—first on their profits and then again when they distribute dividends to shareholders. Currently, the federal tax rate for C corporations is 21%.


Businesses like sole proprietorships, partnerships, and S corporations pay income taxes individually. These are known as "flow-through" entities because profits are first taxed at the business level and then passed through to individual tax returns on Schedule K-1. Unlike C Corporations, these types of businesses don't pay federal taxes at the business level; instead, the amount of income tax you pay depends on your tax bracket.


2. Estimated Taxes 


Businesses have to pay estimated taxes four times a year. If you have a C Corporation and expect to owe more than $500 in taxes, you must pay estimated taxes every quarter. Other types of businesses also need to pay estimated taxes, but only if they think they'll owe more than $500 on their tax return.


3. Self- Employment Taxes  


If you run your own business alone or with a partner and are actively involved, you have to pay both the part of Social Security and Medicare taxes that an employee and employer would pay.


In 2024, the self-employment tax rate stands at 15.3%, with the breakdown as follows:


  • Social Security - 12.4% (6.2% from employees and 6.2% from employers)

  • Medicare - 2.9% for (1.45% employee’s share and 1.45% employer’s share)


If you make over $400 from your business, you have to declare it as self-employed income and pay this tax.


4. Employment Taxes  


When you hire people for your business, there are taxes you need to deal with called employment or payroll taxes. Here's what they include:


  • Social Security and Medicare Tax: Employers pay for Social Security and Medicare as well as from their employees' paychecks.

  • Federal and State Income Tax Withholding: The amount depends on what your employees put on their W-4 forms.

  • Federal unemployment tax: This tax rate is currently 6% on the first $7,000 each employee earns. Businesses might also have to pay state unemployment taxes, which can be different.


5. Excise Tax   


Excise taxes are extra charges you might need to pay if your business does any of these things:


  • Communication and transportation

  • Buying fuel

  • Selling certain vehicles like trucks and trailers

  • Taking passengers on ships

  • Making coal


You can find a complete list of these on the IRS website's excise tax page.


Remember the Typical Tax Credits


Tax deductions and credits help lower your business taxes. You can subtract certain costs like health insurance and office expenses from your taxable income, which means you pay less tax when you file your return. It's crucial to understand which tax breaks and credits your business qualifies for when you're doing your taxes.


Final Thoughts


Every business is unique, so there's no one-size-fits-all solution when it comes to taxes. Sometimes, business owners forget important details and end up filing their taxes late. If your tax situation is complicated or you can't gather all your documents by the regular deadline, you can ask for more time by requesting an extension.


Remember, getting an extension to file doesn't mean you get extra time to pay. You still have to keep up with your estimated tax payments during this time. Falling behind could result in a fine. As much as the IRS wants to collect tax payments, they’re also willing to find a solution to help businesses. If you're having trouble paying on time, contact the IRS early to discuss a payment plan. The sooner, the better.


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