Tax season is here. With the signing of the Tax Cuts and Jobs Act (TCJA) of 2017, some businesses are still in the dark and do not know how to maximize their tax benefits.
Here is an overview of what the new tax law means for businesses in the US.
- Lower tax rates. Under the new tax law, all C-corporations can now enjoy a lower tax rate of 21% instead of the old rate 35%. The graduated brackets for sole proprietorships, partnerships, limited liability companies, and S corporations have also decreased significantly. From 10%, 15%, 25%, 28%, 33%, 35%, and 39.6% to 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Pass-through entities can also enjoy a 20% qualified business income deduction.
- Greater write-offs for equipment buying. If you’re planning to buy a new equipment, furniture, software and hardware for your business, you can write-off the entire cost in the year you place them into service.
- Changes to employee expenses deductions. Businesses are no longer able to write off some employee expenses like transportation fringe benefits, domestic production activities deduction and entertainment expenses.
Now that you have an understanding of the new tax laws, here are some last-minute tips in filing your tax return.
- Know your deadline. Mark your calendars to make sure you don’t miss the deadline for filing your tax return. Depending on what type of business you have, here are the important tax dates you need to remember:
- Partnerships & S-Corporations: March 15, 2018
- C-Corporations and Individuals: April 17, 2018
- Exempt Organizations: May 15, 2018
For those who prefer to pay quarterly, these are the dates you shouldn’t miss:
- First Quarter: April 18, 2018
- Second Quarter: June 15, 2018
- Third Quarter: September 15, 2018
- Fourth Quarter: December 15, 2018
- Filing for an extension is ok. If you need more time to sort out your taxes, don’t be afraid to file for an extension. Whether you’re waiting for information or you just need time to sort things out, you can file for a six-month extension which means you have until October 15, 2018 to file for your tax return.
However, take note that this extension granted is for filing your taxes, not paying your taxes. You still need to pay your taxes on time; otherwise you’ll be subject to interest and a late payment penalty.
- Organize your files. Create a checklist of all the necessary documentation to make sure all your tax information is in order and nothing is left out. Put all your documents in a folder and cross them off the checklist once submitted.
- Start your bookkeeping now. It will be difficult to remember all you events and expenses you have incurred from a year ago. Make it habit to do your bookkeeping in real time so you don’t to worry about them when you file your taxes the next year.
- Outsource your bookkeeping. Offload some of your tasks to a trusted bookkeeping service provider like Global Strategic. We can keep your books updated; assist in invoicing and billing; and processing payables and receivables. By outsourcing your bookkeeping and other accounting tasks, your accountant will have more time to gather your tax information and file your tax return.
If you want to know more about Global Strategic’s Accounting and Bookkeeping services, contact us at [email protected] or call us at (02) 638-3816.