With April 15 fast approaching, small business owners should be getting their tax documents, credits and deductions ready to go. Being diligent about record keeping is probably the best way to come out ahead on tax day. According to the IRS, good records will help you monitor the progress of your business, prepare your financial statements, identify sources of income, keep track of deductible expenses and support items reported on your tax returns.
There are other things small business owners should know, especially with credits and deductions changing from year to year. Here are three tips to help make your 2016 tax process as painless as possible.
According to the IRS, the small business health care tax credit (Form 8941) benefits employers with fewer than 25 full-time equivalent employees that pay average wages of less than $50,000 a year per full-time equivalent and pay at least half of employee health insurance premiums. Small business employers who did not owe tax during the year can carry the credit back or forward to other tax years. Also, if the amount of the health insurance premium payments is more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit.
A tax break that will be extended through 2017, small businesses can use Section 179 to deduct the full amount of certain property as expenses in the year they began using them. This can include up to $500,000 of eligible business property in the 2016 tax year and may apply to property used in manufacturing, transportation and production, a facility used for research, buildings used to hold livestock or horticultural products and off-the-shelf computer software.
Know Your Deadlines
Some of the due dates have changed from previous years, and small business owners who miss their deadlines will have to ask for an extension from the IRS and possibly make estimated payments. Due dates for C-Corporations have been pushed back from March 15 to April 15, but due dates for Partnerships and S-Corporations were moved forward from April 15 to March 15.
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