RED ALERT! New U.S. tax laws go into effect for 2017! Here is one you need to know about—partnership returns must be filed by March 15, a month earlier than in the past. Meanwhile, C-corporations, previously required to file in March, now have until April 15 to submit returns.
Another change is that W-2 and 1099 forms now must be filed with the IRS by Jan. 31; previously, businesses were required to provide these forms to employees and contractors by the end of January, but had until the end of February to send them to the IRS. And there is a penalty if the forms are late.
Also, be aware that the regular tax filing date for 2017 is April 18, due to April 15 falling on a weekend, and a Federal holiday in D.C. (Emancipation Day) on Monday, April 17.
Here are some tax preparedness tips for smaller businesses:
- Take time to correctly set up accounting software. This will save you from extensive data revisions when you start preparing your tax return.
- Be prompt with employee forms. Give W-2s and 1099s to employees and contractors by the end of January—and report them to the IRS by Jan. 31.
- Check your books monthly to ensure you are tracking expenses and keeping good records.
- Try to find an accounting partner that is a good fit for your business’ size and needs. Big firms tend to charge more, and can charge you for every question you call in; small firms may not be as good at guiding you through the tax code for small business filing.
- Don’t wait until the last minute! Business taxes are necessarily more complex than personal returns, and you need to allow time for your business and your accountant to get everything in order for filing the return.
Heads up for 2017
A revised deduction for small business equipment purchases (Section 179 deduction) will allow up-front deduction rather than having to depreciate the costs of vehicles, computers, manufacturing machinery, furnishings and even some types of real property. The new allowable amount is $510,000, adjusted upwards by $10,000 for inflation since last year.
Also new for 2017: stand-alone HRAs (Health Reimbursement Arrangements, a type of health care benefit) are now legal for smaller employers not required to offer health care coverage, but interested in helping employees pay for their own coverage. There are some limits to the amounts permitted per employee. Zane Benefits offers a good explanation and a step-by-step plan for creating an HRA.
Finally, the IRS has set the standard mileage rate for use of a business car at 53.5¢ per mile for 2017.
Visit www.irs.gov for more information and revised rules.