February 2018 - Excel Capital Management

Small Business Taxes: Last Minute Tips Before Filing Your Business Tax Returns

June 26, 2019February 14, 2018 by Excel Capital

Small Business Taxes: Tips for Filing Your Taxes as a Small Business Owner

It’s a new year, and with the new year, brings a new small business tax season.

Taxes are complicated, and the IRS isn’t making things any easier this year, so you need to arm yourself with all the knowledge you can get to so you’re prepared.

If you’re a small business owner, it’s important to know everything you can about filing your taxes– from exact dates and unique requirements to tips and tricks for making the most of this year’s filing.

That’s where this guide comes in.

Below, we’ll arm you with all you need to know for filing your small business tax as an owner, including everything from 2018 filing dates based on entity type to tax tips so you’re fully prepared for the small business tax season.

When is my small business tax due? (Updated for 2018)

Let’s start with the basics, shall we?

The tax filing date for personal tax returns is April 15th of every year (unless that date lands on a weekend or holiday– see below).

With that in mind, for 2017 taxes (filed this year in 2018), the personal tax return due date is April 17, 2018 (IRS.gov).

This is because April 15th is a Sunday and Monday, April 16th is Emancipation Day.

If you’re a sole proprietor, you’ll file your small business tax return together with your personal tax return.

However, if you’re anything other than a sole proprietor, your business’ due date will be different.

2017 Tax Filing Due Dates by Business Entity (filing in 2018)

Here are the exact due dates based on each type of business entity for 2018 (filing 2017 taxes):

Sole Proprietorships + Single-member LLCs (Schedule C): April 17, 2018
Partnerships (Form 1065 with Schedule K-1’s): March 15, 2018
Multiple-member LLCs (Form 1065 with Schedule K-1’s): March 15, 2018
S Corporations (Form 1120 S): March 15, 2018

C Corporations work a bit differently from other business entities. Depending on when the C corporation’s fiscal year ends, the filing date changes:

For C corporations with a December 31st year-end: April 17th, 2018
For C corporations with a June 30th year-end: September 17th, 2018

Should I file my own small business tax or go to a professional?

That’s the big question, isn’t it?

Especially if you’re a new business, the thought of sparring every expense is enticing, however, tax filing fees aren’t somewhere you should be trying to cut back (and, besides they can be used as a partial or full write-off in most cases the following year!).

Despite this, software such as TurboTax is now both sophisticated and thorough, with the ability to take you from tax novice to fully-filed business taxes with very little effort or know-how on your end.

Also, keep in mind that if you’re a startup in your first year of business, you don’t have to file taxes until you’ve finished your first fiscal year.

So then, the big question is: how complicated is your small business tax situation?

Ultimately, the decision is up to you, but if your revenue, expenses, deductions, and forms aren’t absolutely straightforward– particularly if you’re a more complicated business entity such as a partnership or corporation– it’s generally better to just go to a professional.

The alternative is ending up with an error on your taxes that can come back and hit you, which will cost you later on down the line.

However, if your small business tax situation is straightforward and your confident doing it yourself, the software available now is super easy to use and more than competent to help you file your small business tax.

Another benefit is you can get your personal taxes done all at the same time. How awesome is that?

Self-filing tax software options

Here are three great options if you’re looking to file your business income tax returns yourself this year:

Intuit TurboTax

TurboTax is generally considered the most streamlined of the three options listed, but they’re all great.

With TurboTax, you can either purchase the CD/software download or simply use the software through the website itself without needing to download anything.

Check out all your TurboTax options here.

*State returns are extra for all versions.

H&R Block

H&R Block’s tax software is another great option for anyone looking to self-file. Their software is a bit less intuitive, but the Business edition of the software is half the price.

As with TurboTax, with the H&R Block tax software, you can purchase the software download or use the software through the website itself without needing to download anything.

Check out all your H&R Block options here.

*State returns are extra for all versions.

TaxAct

The final option for self filing your small business tax, TaxAct offers little over TurboTax and H&R Block, but prices for online versions are lower and TaxAct offers a notable guarantee on your refund amount in case of errors or discrepancies.

Check out all your TaxAct options here.

*State returns are extra for all versions.

Check out our complete guide for the top 5 small business tax software here

What is the difference between a fiscal year and calendar year?

Based on IRS guidelines, business owners have the ability to choose the type of income reporting schedule they’d like to use.

The two methods include:

Calendar year

The IRS defines a tax calendar year as a traditional 12-month period beginning on January 1st and ending on December 31st of the same year.

Fiscal year

A fiscal year is also a 12-month period, however, the starting month is different than the traditional January calendar year.

This method begins on the first of that particular month and ends 12-months later (although it doesn’t have to end on the last day of the month, like it does with the calendar year).

How is my filing schedule decided?

Keep in mind that if you’ve done any one of the following, an income reporting calendar method hasn’t been automatically chosen for you:

You’ve requested an EIN (Employer Identification Number)
You’ve paid estimated taxes for your business’ first tax year
Or you’ve requested an extension on your business taxes

So then, how do you choose your tax reporting schedule?

A new business chooses their tax filing schedule when it files its first official tax return.

If you don’t have regular accounting method, you’re required to use the calendar year method. However, the calendar year method is available to all other businesses types as well.

If you’re an S corporation, you’re essentially required to use the calendar year method, by either using the calendar year method of a fiscal year ending on the same date of December 31st.

Once your small business tax reporting schedule has been chosen, you’re required by IRS guidelines to continue filing your taxes using that method.

That means if you’ve already filed an official tax return for your business, you’re likely using a calendar year method already and must continue to do so.

To change your filing schedule, you must request and receive approval from the IRS.

What can you write-off?

Now that we’ve got the basics out of the way, it’s time to file your taxes.

But you’re a small business, so it’s important to keep in mind that there are a ton of items you can write off and deduct from your taxes, so many that it’s hard to list them all (but we’re sure going to try!).

That’s where our next tip comes in.

Here’s a quick-reference list of many of the things you might be able to write off depending on your type of business:

Accounting services
Advertising and marketing expenses
Attorney fees due to criminal issues related to your business
Auto and vehicle expenses
Bad debt (only certain kinds)
Bank charges
Business gifts
Business training and seminars
Casualty and theft losses
Charitable contributions (only certain kinds)
Child labor
Consulting fees
Contract labor
Educational expenses
Entertainment (as it pertains to business)
Equipment rentals
Freight and shipping fees
Health care expenses
Home office space
Insurance expenses (including property, equipment, liability, workman’s comp, and more)
Internet bill
Janitorial expenses
Licensing and regulatory fees
Meals (as it pertains to business)
Moving expenses (as it pertains to a business move or a personal move required by the business)
Office supplies
Payroll
Payroll and property taxes
Permits and fees
Phone bill (the portion used for business)
Postage and mail fees
Professional fees
Recruiting expenses
Rent
Repairs and maintenance
Retirement contributions
Salaries and wages
Smartphones and tablets (if used for business purposes)
Social Security
Software and hardware
Travel expenses (for business)
Uniforms and similar equipment
Utilities
Waste removal

Keep in mind that this list isn’t exhaustive. The number of potential write-offs is huge, so if there’s something not listed here make sure to check with a tax professional.

What can you not write off?

At this point, you might be really excited and want to start looking everywhere for new potential write-offs and deductions.

But slow down– there are quite a few things that you can’t and shouldn’t try to write off unless you feel like running into trouble.

And then there are others you need to be careful to write off the right way (typically, these are things you can write off a portion, but not all, of).

Here are the most notable:

A small business loan (However, purchases made with the loan funds and even interest and fees are deductible, which we’ll talk about in a moment)
Charitable contributions
Federal income tax
Life and disability insurance premiums (but only if you’re a sole proprietor, partnership, or S corp)
Membership fees (even if it’s connected to business)
Political contributions
Tickets and fines (for breaking the law)

Also, keep in mind that certain other expenses such as your rent (in the case of a home office) and phone bill may qualify for a partial deduction. However, it’s important to be careful here and not deduct the entire expense (and to keep accurate, detailed records).

You can deduct interest, loan fees, and even depreciation too

We told you there was a lot you could deduct– and we meant it.

A few additional items you can write off that are less common, but which can add up to a sizeable amount, are:

Interest: Did you know that the interest you pay on a loan can be deducted? That’s right. Just make sure to keep meticulous records showing that you used the loan to pay for business expenses and investments.
Certain loan fees: In addition to the interest you pay on a business loan, you can even deduct certain fees associated with paying a business loan.
Depreciation: Even depreciation on things such as property, equipment, and furniture can be deducted if it’s relevant, so make sure to keep accurate depreciation records so you know how much you can deduct. This one deduction can result in thousands of dollars back each year.

Little-known deduction: Deducting property under section 179

Another important but often-missed deduction is property under section 179.

IRS section 179 states that small businesses can deduct the full amount of certain types of property, up to a whopping $1,000,000, within the year that the business started using them.

Eligible property includes:

Property used for manufacturing, transportation, and/or production of products or services
Facilities used for business or research purposes
Facilities used to house livestock or similar products
Facilities used to store (not sell) computer software

However, keep in mind that the below property is excluded from the 179 property category:

Land
Investment property
Or property that provides lodging

Make the most of filing your small business taxes

The New Year is here– are you prepared to file your taxes?

If you’re a small business owner, you need to get all the information you can with regards to your tax situation so you can make the most of your tax filing.

Use the tips and information above to make the most of this year’s taxes and come away on the winning side of Uncle Sam.

9002 Credit or 9003 Credit Quick Guide: How to Fix Your Credit If Your Score Is 9002 or 9003

October 20, 2019February 6, 2018 by Excel Capital

If you’re a business owner and in the marketing for business funding – you will have to use your credit. if you have a 9002 credit or 9003 credit score you should know that this doesn’t mean you have bad credit, however, this number means that you don’t have a real credit history.

Most credit reporting agencies assign the 9002 code in scenarios where there are not enough credit account records (also known as tradeline) to calculate a typical credit score.

When it’s time to seek out business loans or business lines of credit to help keep your business afloat or expand it, a 9002 rating is likely to work against you. Most lenders and banks will decline your business loan application with a 9002 credit score.

For the good of your business, this type of credit score should be removed as soon as possible.

Today, we’re going to share some helpful information about 9002 credit rating codes. Particularly, this advice is for business owners. However, some non-entrepreneurs also receive this credit score and will be able to use many of our tips to improve their personal credit scores as well.

Below, we’ll show you how to get rid of your 9002 credit rating. We’ll also let you know how to build a real and impressive credit score which makes it easier to access affordable credit when you need it.

Once you’ve learned everything you need to know about the 9002 credit score code and how to get it removed, you’ll have empowered yourself and your future as an entrepreneur and business owner.

Keep in mind even with a 9002 credit score there are bad credit business loans and other funding alternatives available. Often times this is the right place to start when trying to establish business credit.

Why is a credit score so important?

Your business credit score lets lenders know how likely you are to make timely repayments. This rating helps lenders to assess the risk (or lack thereof) of granting credit to you and/or your company. Getting a business loan with bad credit or a 9002 score, on the other hand, can seem impossible.

Since there aren’t enough credit accounts related to you or your company, including lines of credit, credit cards, and mortgages, you are an unknown risk factor.

Prospective lenders may reject your request for credit due to your 9002 credit rating. That’s the bottom line.

What does no credit score mean?

A 9002 credit score or no credit score means your profile report doesn’t have sufficient tradeline to satisfy the credit bureau in two important ways, which includes:

Status date for the past six months
A balance in the past six months

When there isn’t sufficient tradeline, according to current rules, the risk score isn’t calculated as it usually would be.

Experian uses an Intelliscore Plus algorithm (an algorithm is a group of rules for digital calculations). Typical, non-9200 credit scores for businesses, via Experian, range from one to one hundred.

Basically, the higher your score is (the closer to one hundred), the better. Lower scores may mean trouble when it’s time to seek out new credit and that trouble may come in the form of exorbitant interest rates or altogether rejection of credit applications.

To generate a proper credit score, you will need to have at least one tradeline which has been open for six months or longer. You’ll also need at least one account which is undisputed that has been reported to Experian within the past half-year. In addition, there shouldn’t be an “indication of deceased” on the credit report.

What is the difference between 9002 and 9003 credit?

Similar to 9002, 9003 isn’t a credit score but a code which refers to a lack of credit history.

However, there’s a clear difference between the two:

9002: As we covered earlier, this indicates having no activity on your credit report in the past 6 months.
9003: This code indicates that you do not have an account on your credit report which is at least 6 months old.

With 9002 credit, you may have several older accounts which are no longer reporting activity. So, no changes have been reported on your credit report in the past 6 months.

However, with 9003 credit, you may have several accounts on your credit report, but they’re all recent (less than 6 months old).

The difference comes down to whether you have older accounts with no recent activity (9002 credit) or only recent accounts less than 6 months old (9003 credit).

Now, let’s talk about how to establish credit activity which will lead to a healthy credit score.

How to fix your credit score

There are several steps you will need to take to fix your credit score. Your Experian Intelliscore Plus rating should be between seventy-six and one-hundred. This means that you’re a low risk to lenders.

A low-to-medium risk is denoted by a score of fifty-one to seventy-five. Medium risk is indicated by a credit rating of twenty-six to fifty. A score between eleven and twenty-five means high-medium risk. A score of one to ten means high risk.

To turn things around, you should follow these five practical steps:

Step 1: Get your credit reports

Get a credit report from Experian as well as copies of your credit reports from Equifax and Dun & Bradstreet. You’ll need to pay for these reports, however, they’re worth the money. You’ll need them to find information that helps you move forward and get a real credit score.

Look at the reports to see if any credit entries are negatively impacting your score. Can anything be disputed?

Step 2: Dispute credit report mistakes

It’s possible to dispute mistakes on credit reports. When you successfully dispute a credit entry, it will be removed. If you see a mistake on one of your reports, call the bureau(s) that generated the reports to let them know that you wish to dispute the errors.

When errors are removed from your credit reports, your credit score will go up.

Step 3: Pay your bills on time

You should make a point of paying every bill in a timely fashion. Of course, to some this might be common-sense advice…but it’s important advice nonetheless.

That’s because if you miss payments, your credit score will go down. Also, if you do things to improve your score, but still make late payments, your efforts to boost your score will be negated. You’ll continue to be perceived as a debt risk and all the work you’ve put into improving your score will have been for nothing.

Step 4: Establish new credit

If you have no credit accounts or don’t have enough of them, you’ll need to get up and running with credit. You shouldn’t open too many new credit accounts at once, though, as doing so will be detrimental to your credit rating.

Instead, be discerning and take out one form of credit (or a couple).

At Excel Capital Management, we specialize in helping business owners with poor credit or a lack of credit history (9002) get business loans, so you don’t have to be held back by a lack of funding when you’re trying to grow your business.

And remember: once you’ve established that new credit, stick to making timely payments.

Step 5: Set up credit accounts with suppliers

Another tip is to set up credit accounts with vendors. You may have suppliers that you work with regularly and have positive relationships with. These are good companies to set up credit accounts with.

Keep in mind that since some suppliers fail to offer payment information to the credit-reporting bureaus, you should put trade references into your business credit file. You can do this manually via Experian and the other credit-reporting bureaus.

Follow our simple credit-building steps today

With a 9002 score, you don’t need to “put good credit after bad”. You need to establish credit in the first place and then manage your credit carefully by making payments on time.

By following the five simple steps above, you’ll find that generating a good credit score is an achievable goal– making you eligible for a small business loan or business line of credit that helps move your business forward.