Be Prepared: New Tax Codes for Small BusinessesAll Articles
Whether you choose to do your taxes yourself, or have a tax professional sift through the mess for you, it’s vital to be aware of changes in the tax codes. Understanding these changes will help you make decisions which result in growth for your business and avoid dangerous pitfalls which sink all of your hard work.
This could be the final year of “bonus deprecation”
Bonus deprecation is a rule which allows businesses to deduct 50% of the deprecation value of certain equipment and software purchases made in the first year. It’s anticipated that the allowed percentage will fall in the coming years.
Filing deadlines have changed
Deadlines for several different kinds of businesses have changed. C-corporations which use IRS form 1120 need to file their taxes by April 15th. S-corporations who use form 1120-S now need to file by March 15th, as do partnerships that use form 1120. Not filing on time is one of the biggest mistakes entrepreneurs make, which often lead to huge penalties from the IRS.
Section 179 has changes as well
Section 179 of the tax code allows businesses to deduct $500,000 from purchases that do not cost more than $2 million. There are some requirements to use this deduction, such as using the equipment the same year it is purchased, as well as being used for business purposes at least 50% of the time.
As you can see, and most likely already know, handling your business’s taxes is no easy feat. But a clear picture of this landscape is a necessary evil in order to gain an understanding of your financial obligations and to become aware of any needs for loans. If it ever becomes too much and you want a helping hand, we’re always here to offer our guidance.