What You Need to Know for Filing Small Business Taxes in 2016

Posted on February 23, 2016

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Get Updated on Small Business Taxes and be Prepared for Tax Day

small business taxesYou may be focused on compiling receipts and other information to complete your 2015 tax return. However, there are a few new items affecting small business taxes that you might want to note because they can have a significant impact on your final tax bill.

Here are just a few of the items impacting small business taxes for this year:

Two tax breaks: There are two important extensions coming in the form of tax breaks. Section 179 allows businesses to deduct the price of equipment put into use that year, up to $500,000. This may be more beneficial than deducting the depreciation, in which it can take years to reclaim the amount spent on a purchase. The second extension is special depreciation, in which a business can depreciate up to 50 percent of the cost of equipment put into use in 2015. These two tax breaks can be used together, but check with your accountant to see how your business can best maximize tax savings.

The Affordable Care Act: The most important way that the Affordable Care Act affects small business taxes is that many businesses will face a penalty for failing to provide adequate protection to their employees, or for failing to properly report the type of coverage they provided to employees.

Business with more than 51 employees are required to provide health insurance for at least 70 percent of their employees or face a fine of $2,000 per employee. The fees for improper reporting are not as severe, but it is important that you report accurate information on your employees’ W-2s so that the IRS gets clear information about your adherence to the guidelines. Again, it is important that you talk with your accountant to ensure that you are meeting the requirements of the Affordable Care Act.

Taxes on online sales: If a portion of your business is conducted online, you may be required to pay sales tax in your state in the near future. While this bill is still working its way through Congress, it is designed to level the playing field between brick-and-mortar stores and online markets. If your sales exceed $1 million per year with online customers, you can expect to pay sales tax like any other local business. If you are a brick-and-mortar retailer watching sales slipping away to the Internet, this is good news.

While small business taxes can be a big task for company owners, there are things you can do all year to make tax time easier:

  • Don’t put off matching receipts with expenses, or any other paperwork. The shoebox filing method doesn’t work; set aside a few hours each month to keep up on keeping accurate, neat records.
  • Make notes at tax time about what you need to do differently the following year. Your accountant can provide information that will help you move forward and minimize later headaches.
  • Consider outsourcing. If you are doing your own bookkeeping, think about the benefits of hiring a specialist to handle your payroll and other bookkeeping tasks.

Bert Doerhoff, CPA, and his team at AccuBiz work with many companies like yours to prepare small business taxes. Whether you require assistance each tax season to prepare an accurate return, or if you want more comprehensive bookkeeping and accounting services, AccuBiz can meet your needs.

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Posted in: Small Business