The tax landscape for small businesses changes constantly. Every year, it seems like there’s a new report to fill out, a new deduction to take, or a new rule that prevents you from getting that tax break you’ve always counted on. Tax season is upon us again, so it’s time to make tax planning a priority for your small business.
Business tax deadlines for 2024
Let’s begin by reviewing your tax deadlines. Three major ones are coming up in the next few months. Missing any of these could add to your tax liability and potentially incur fines and penalties for your business. Here’s what you need to be ready for:
● January 31, 2024: If you have employees or contractors working for you, this is the deadline to send out W-2s and 1099s.
● March 15, 2024: This is the tax filing deadline for any corporation set up as a partnership, S corporation, or multi-member LLC.
● April 15, 2024: The date is familiar because it’s the deadline for individual filers. It’s also the filing deadline for sole proprietors (Schedule C), C corporations, single-member LLCs, and LLCs taxed as a corporation.
Regulations impacting small businesses in 2024
You must be aware of some of this year’s legislative changes outlined below. These are not necessarily tax-specific, but violating these new rules could be costly for your company. Take a few moments to review them. Speak to your business attorney or corporate accountant if you have additional questions.
Register with the Financial Crime Enforcement Network
The Corporate Transparency Act seems to be getting a lot of press this tax season. It’s a new piece of legislation that requires your incorporated business to report ownership information to the Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury. They’re the folks that police money laundering. The report is due by January 1, 2025.
Report your digital transactions
For 2023, the IRS was supposed to institute a new requirement mandating the reporting of payments over $600 made via third-party processors like Venmo or Zelle. That regulation has been delayed until later in 2024, so you won’t need to worry about it this tax year. Talk to your accountant about the best ways to handle third-party payments.
Update how you report your small business loans
Another legislation still on hold is the CFPB’s requirement that banks report income and demographic information for small business borrowers. Advocacy groups claim the rule could make getting a small business loan more difficult, so the CFPB has stayed deadlines for compliance. You’ll still want to ensure accurate loan reporting on your taxes.
National Labor Relations Board joint-employer rule change
The National Labor Relations Board issued a revised joint employer rule in October that expands the definition of “joint employer.” This mainly applies to franchisors and franchisees, but the rule goes beyond that. It states how responsibility for unfair labor practices will be assigned according to the National Labor Relations Act.
Changes to wages and overtime
There’s a lot of good news for employees as we enter 2024. In fact, 20 U.S. states are instituting minimum wage increases for hourly employees, including Nebraska going from $1.50 to $12, and Florida going from $1 to $13. The Department of Labor is also pushing for a new rule to let 3.6 million workers qualify for overtime, but that’s still in the works.
How to organize your financial statements
Don’t wait too long to organize your financial statements. Use these last few weeks of January to gather bank statements, credit card statements, loan documents, and transactional data from your payment processors. Organize as if the new rules are already in effect. Getting accustomed to doing it this year will make next year’s tax filing much easier.
Helpful tax strategies for businesses
Plan ahead for tax filing
The easiest way to stay prepared and organized for filing your tax returns is to use your business checking account’s sub-accounts feature. Sub-accounts let you separate your deposits into different accounts that sit under your main account, each with unique account numbers. This is especially effective when putting money aside for taxes, large expenses, emergency funds, etc.
Maximize your deductions
Check the IRS guidelines for deducting retirement contributions, travel expenses, working from home, and mileage. The limits for each of these typically increase yearly to adjust for inflation. Be sure to get the most out of those limits, and don’t lose out by not being up to date.
Use tax credits
Tax credits are often overlooked as small business owners look for tax deductions. Federal and state revenue departments offer tax credits as incentives for different business practices. That could include green energy credits, diversity hiring, or pro bono work.
Contribute to a retirement plan
The IRS maximum contribution limit for a 401(k) plan in 2024 is $23,000. You can contribute another $7,000 to an IRA. These contributions are tax-deferred, so you can lower your tax liability for the year by maxing them out. Check with your accountant for more on this.
Stay informed on new tax laws
We’ve mentioned a few legislative changes above, but there are even more to learn about. Check with your local revenue department for any changes in local tax laws.
Seek professional counsel
If you have a legal question, talk to a lawyer. Accounting questions should go to your accountant. You’re a business owner, so stick to what you’re good at and rely on experts for legal and tax-related questions.
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