Managing a business means acting, reacting, and making dozens of important decisions every day.
From making quick choices in the moment to dealing with standard operating procedures, it’s easy to lose sight of what’ll happen next week, let alone next month. If planning for the long-term feels next to impossible, we get it. It’s certainly easier to make decisions and react to what’s happening right in front of you than it is to think about something a year into the future.
But you know the inevitable outcome of getting caught in this cycle. Tax season sneaks up, just like it does every calendar year. You scramble to reconcile your books and run your business at the same time. Long nights. Feeling overwhelmed. Frustration. Where is that receipt from that one lunch in January last year? More importantly, why did you wait until the last day again?
Well, this year will be different. This year, you’ll be organized. Why? You’ve got us!
That’s why we’ve created the 2019 Small Business Tax Calendar to help you stay on top of important IRS due dates throughout the year and keep ahead of the federal government. Gone are your days of wondering about quarterly payments, w-2 forms, payment due dates, and other stressors that come with being a small business owner. (Except we can’t help you with that missing lunch receipt.)
To get the most out of the 2019 Tax Calendar, you may need to rethink or create new procedures for managing tax issues. However, doing so can help you minimize your risk of accruing unnecessary penalties and interest costs. First things first, let’s look at how you do things.
What’s your process?
Proper tax planning requires you to submit tax documents on a variety of due dates.
Start this process by checking with your CPA to confirm the due dates for the upcoming tax year. Create a system to remind you when these dates are approaching, and include enough lead-time to file your tax documents in a timely manner. You can input new alerts into your calendar software or write the dates in your planner.
And if you don’t already have a bookkeeper, you should strongly consider hiring one. A bookkeeper can help you stay organized throughout the year and make tax time much, much easier.
Your biggest time saver
For many businesses, payroll is the most complicated and time-consuming task, and taxes are part of the process. If you create a system to process payroll efficiently, you can save a lot of time.
Payroll is complicated for several reasons:
- Employee records: Each worker’s payroll information is different, including different salaries, hourly rates, tax withholdings, and benefit payments. Payroll information also changes, as employees are promoted or have a change in family status. Maintaining these records is time-consuming.
- Tax tables: Both federal and state income tax rates change frequently, and companies with employees in multiple states must withhold income taxes for more than one state. In addition, you may need to withhold income for city and local taxes. This makes calculating gross and net pay even more difficult
- Tax reporting: The federal, state, and city income tax returns are all different, and you may need to file dozens of tax forms each month and year.
For all of these reasons, you may save time and costs by outsourcing the payroll function to a third party firm. These companies can manage both payroll processing and tax reporting, and they make the necessary changes to their software as the tax laws change.
When are business taxes due?
Here are the important due dates you need to know for the 2019 calendar year. The dates are grouped by the type of tax collected to make things easier as filing deadlines approach.
January 31, 2020
This is the deadline to send out Form W-2 to your employees, and to file the documents with the IRS. Make sure you understand the difference between employees and independent contractors from the IRS’s point of view.
You’ll need to submit copies of employee W-2s to the IRS. To determine which form to send, reference this 1099 vs. W-2 calculator.
This is also the deadline to issue 1099s to all independent contractors who received payments in 2019.
February 29, 2020
Deadline for businesses to file information returns with the IRS that report on 1099s issued for 2019. Companies use IRS Form 1096 (Annual Summary and Transmittal of US Information Returns) for this filing.
April 1, 2020
The deadline for filing 1099s electronically is April 1st. If you don’t file electronically, the deadline is February 29th (see above).
Corporate tax returns
The type of tax return that your company must file depends on the business structure you choose when you start your business.
Here are the most common forms of business structure:
- Sole proprietorship: You are the only owner of the business. Setting up this type of entity is the easiest. However, you’re exposed to business legal liability because there is no legal difference between you personally and your business. If you own a coffee shop, for example, and a customer falls and sues your shop for negligence, both your business and personal assets are at risk. This type of business falls into Schedule C territory.
- Corporation: A corporation (C-corporation or C-corp for short) offers the most legal protection because the business is a separate legal entity from the owner. A C-corp also makes it easy to bring in other owners by issuing shares of common stock. However, setting up a C-corp and meeting the regulatory reporting guidelines can be time-consuming. There’s also a corporation tax collected, so be prepared for that as well. Corporation tax returns can be complicated and require more planning and preparation than individual returns.
- S-Corporation: If your business is an S-corporation (S-corp), the profits and losses of the S-corp are passed through to each shareholder’s tax return.
- Partnership: A partnership files a tax return, but the profits and losses of the partnership are passed through to each partner’s personal tax return. This type of tax is generally processed using the Schedule K-1.
- Limited liability company (LLC): An LLC allows you to limit your personal liability for business risks without having to meet the same level of regulatory requirements as a corporation. There are several different LLC structures, based on your state’s tax laws.
Work with a CPA or an attorney and consider the pros and cons of each business structure. Once you know your business structure, you can use these dates for tax filing and reporting purposes. Each due date applies to corporate structures, not pass-through structures, unless otherwise noted.
March 15, 2020
This is the tax return deadline for S-Corps (using Form 1102-S) and for partnerships (using Form 1065). You can file for a 6-month extension on either return, but your tax liability is still due on March 15th.
April 15th, 2020
This is the due date for corporate tax returns, using Form 1120.
If you must make 2019 estimated tax payments for your business, payment for the 1st quarter of 2019 is due on April 15th, 2019. (More on estimated tax payments below.)
June 17th, 2019
If you must make 2019 estimated tax payments for your business, payment for the 2nd quarter of 2019 is due on June 17th, 2019.
September 16th, 2019
If you must make 2019 estimated tax payments for your business, payment for the 3rd quarter of 2019 is due on September 16th, 2019.
If you received a 6-month extension to file a tax return for an S-Corp or a partnership, the return is due on September 16th.
October 15th, 2020
If you were granted an extension of time to file a corporate tax return, your tax return is due on this date.
January 15th, 2020
If you must make 2019 estimated tax payments for your business, payment for the 4th quarter of 2019 is due on this date.
A note on estimated tax payments
Self-employed individuals and most businesses must make quarterly tax payments. These payments ensure that the individual or business pays a large percentage of their estimated tax liability during the year, rather than in one payment when the tax return is filed.
We’ve covered business estimated tax payments, and you’ll see personal estimated tax payment dates below.
Individual tax returns
Almost everyone is required to file a personal tax return using Form 1040, and this includes business owners who run a pass-through business structure. The income produced by your corporation, partnership, or other business entity may generate income that is posted to your personal tax return.
January 15, 2020
If you make estimated tax payments on your individual business earnings, the deadline for 4th quarter estimated tax payments for 2019 is January 15, 2020.
April 15th, 2020
Individuals must file the 2019 income tax return and pay any remaining tax liability by this date. You can request more time to file your tax return by completing IRS Form 4868, but your tax liability is still due by April 15th.
If you must make 2019 estimated tax payments for your personal taxes, payment for the 1st quarter of 2019 is due on April 15th, 2019.
June 17th, 2019
If you must make 2019 estimated tax payments for your personal taxes, payment for the 2nd quarter of 2019 is due on June 17th, 2019.
September 16th, 2019
If you must make 2019 estimated tax payments for your personal taxes, payment for the 3rd quarter of 2019 is due on September 16th, 2019.
October 15th, 2020
If you were granted an extension of time by filing Form 4868, your tax return is due on this date.
If you need these dates for your business or personal taxes, post the dates to your calendar, and set up a reminder so that you’re alerted when the date arrives. This system will keep you on track and help you avoid tax fees and penalties.
As you think about tax planning, consider these common taxpayer misconceptions, and make sure that you understand how each of these issues impacts your personal or business tax return.
Realized gains vs. recognized gains
If you buy an asset and sell it for more than you paid for it, you have a realized gain. If, for example, you buy 100 shares of IBM common stock at $10,000 and sell the shares for $15,000, your realized gain is $5,000.
A recognized gain, on the other hand, means that you owe taxes on the gain. Not every realized gain is recognized for tax purposes, and there are dozens of examples. In some cases, you can offset a realized gain with a realized loss and not owe taxes on the gain. This can impact both business and personal tax returns.
Marginal tax rate
Your marginal tax rate is not the tax you pay on all of your income. Instead, the marginal tax rate is the tax you pay on your next dollar of income. The IRS Tax Tables provide different tax rates for different levels of income.
For 2019, taxpayers pay a 22% tax rate on income from $39,475 to $78,950, and a 24% rate on income from $84,200 to $168,400. Assume, for example, that your salary is $82,500. If you earned $10 more in 2019, you would pay 24% on those next $10, and your marginal tax rate would be 24%. Note that you would still pay 22% on the rest of your income below that cutoff.
The same principle as the above example applies across every tax bracket with the taxable amount increasing as you climb from bracket to bracket. The Tax Foundation provides a full updated tax bracket.
Alternative minimum tax (AMT)
Some individual taxpayers must calculate their tax liability twice because of AMT. The alternative minimum tax was put in place to assess taxes on certain transactions that would otherwise not be taxed.
A good example is income earned on certain municipal bonds. Assume that you calculate your taxes and come up with a $15,000 tax liability, and the tax law requires you to calculate AMT. The AMT calculation will add municipal bond income into your tax calculation — income that is tax-exempt outside AMT. If the AMT tax calculation generates a higher tax liability, you’ll pay taxes on the larger amount.
Invest the time to plan
Invest the time that’s necessary to calculate your taxes, make payments, and file the returns on time. Proper planning can help you avoid interest costs and penalties down the road. Ask a CPA to help you with this process. And download a free spreadsheet with all the dates you need to know to manage your taxes on time.