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.
