2020 has been an unusual year for a variety of reasons, the most obvious of them being the pandemic. It’s been especially difficult for small business owners, who have had to concentrate on survival rather than growth. Still, it also means that larger companies are thinking about bookkeeping and avoiding paying taxes as much as possible.
It doesn’t matter whether you are an artist, retail owner, entrepreneur, or real estate investor - every individual has to start thinking about taxes if they own a small business. Many business owners should also consider consulting with a CPA and ensuring that their organization maintains accurate bookkeeping records.
While COVID-19 may have affected your revenue, it should not prevent you from staying on top of your taxes and avoiding future fines and headaches. Let’s explore 2021 and why you might want to consider filing your small business taxes early. Yes, you will have to file taxes in 2021, and they will be due April 15, 2021.
2021: Filing Taxes
If you are a small business that received relief of some kind, it might take longer to deal with your taxes. There are more forms involved when dealing with the Economic Income Payment and claiming the Recovery Rebate Credit may mean that your small business has to wait longer in general.
It’s also important to remember any relevant tax deductions and credits before filing. This also includes charitable deductions that you may have forgotten about, small business expenses that you didn’t consider, or other ways that COVID affected your business. It might be best to hire a CPA or accounting professional who understands your particular industry if you want to maneuver through the tax process the right way.
You should file your taxes as soon as possible either with a CPA or by yourself, and whether you own a small business or not. You should also promptly file your taxes if you are a gig worker or freelancer affected by COVID. Of course, if you still haven’t done your taxes, rushing to file taxes isn’t a smart move if you will not be comprehensive regarding credits, deductions, and refunds.
There is a chance that you are a gig worker or own a small business that can’t afford to wait. COVID has affected the world’s economy, so it is understandable that it has led to freelancers, employees, and entrepreneurs losing their jobs and income. This is an inevitable consequence of the pandemic, which is one of the reasons that so many countries have offered financial relief of some kind.
For those who own a small business or are eagerly waiting for money from taxes, one option is to consider a loan. Of course, individuals and businesses should explore their decisions before filing for a tax refund anticipation loan. TurboTax is one of the most popular companies offering loans at this time but remember to consider your financial situation before agreeing to anything.
It might be smart for individuals that need it the most, but it may not be the best option for you or your small business. Your CPA may want to offer some accounting advice whether it is a smart move to apply for this loan or not. Regardless, it is certainly available as a last resort for freelancers that may have had it tougher during COVID than usual.
There is a chance that you will file for your tax refund and actually get a response within weeks. However, there is also a chance that you or your small business will have to wait for months to receive a tax refund of any kind. One of the smartest things you can do is to E-file, which is the quickest way to file taxes. If you have been affected by the pandemic and are hoping for the fastest possible response to your taxes, E-filing is absolutely the way to go.
If you are a small business and filing for tax credits, it could take a while longer. The IRS will also hold a tax return if it needs more information. If you have a lot of complicated tax credits to consider, you can expect that this will affect your taxes in some way.
If your small business is still trying to assess COVID-related damage, you shouldn’t be concerned with filing taxes immediately. Many large corporations are still trying to figure out how to adapt to the current situation, and your cpa likely understands that this may not have been the year for you to scale accordingly.
Business owners should take into consideration whether you let anyone go during tax season, as well, as many a small business had to fire employees when it was clear that they could no longer afford to keep them on the payroll.
You may already have some tax deductions in mind or have other strategies regarding your capital gains taxes. Depending on your industry, you might be eligible for tax credits regarding an office, environmental regulations, or expenses related to your business. Get all of your deductions and credits in order and consider consulting a CPA or an accounting professional if it feels like the work is too complex or overwhelming.
A small business has to always remain aware of accounting challenges and should remain as detailed, accurate, and meticulous as possible when it comes to filing taxes. There is a good chance that your small business was not as successful in 2020 as it was in years past, but 2021 could mean that your business begins to start thriving again.
It’s important to speak with a CPA or accounting professional that is truly looking out for your best interests. You might think that you understand taxes completely, but a freelancer or gig worker may benefit from a conversation with someone who knows the ins and outs of accounting.
While COVID-19 may have forced you or your small business to adapt, it doesn’t mean that you can’t take advantage of credits and benefits that can benefit you in 2021 and beyond. If you want to know more, email the tax team at Hall Accounting Company at email@example.com for more information.
FUTURE IMPORTANT DEADLINES
Deadline for employers to mail out W-2 Forms to their employees and for businesses to furnish 1099 Forms reporting non-employee compensation, bank interest, dividends, and distributions from a retirement plan
Deadline for businesses to mail Forms 1099 and 1096 to the IRS
Deadline for S-Corporate tax returns (Form 1120-S) for tax year 2020, or to request an automatic six-month extension of time to file (Form 7004) for S-Corporations that use the calendar year as their tax year, and for filing Partnership tax returns (Form 1065) or to request an automatic six-month extension of time to file (Form 7004)
Deadline for businesses to e-file Forms 1099 and 1096 to the IRS, except Form 1099-NEC
Deadline to file individual tax returns (Form 1040) for the tax year 2020 or to request an automatic extension (Form 4868) for an extra six months to file your return, and for payment of any tax due, and for Deadline for corporate tax returns (Forms 1120 and 1120-A) for tax year 2020, or to request an automatic six-month extension of time to file (Form 7004) for corporations that use the calendar year as their tax year
Deadline for household employers who paid $2,200 or more in wages in 2020 to file Schedule H for Form 1040
Deadline for first-quarter estimated tax payments for the 2021 tax year
Deadline for second-quarter estimated tax payments for the 2021 tax year
Deadline for third-quarter estimated tax payments for the 2021 tax year
Deadline for S-Corporate tax returns (Form 1120-S) for tax year 2020 for S-Corporations that use the calendar year as their tax year, and for filing Partnership tax returns (Form 1065)
Final extended deadline to file individual tax returns for the year 2020 (Form 1040), and for Deadline for corporate tax returns (Forms 1120 and 1120-A) for tax year 2020 for corporations that use the calendar year as their tax year