Whether you’re a small business owner or a self-employed individual, it’s time to chart a course for smoother sailing with your 2023 tax returns. Our Accounting Team has put together answers to some business tax FAQs to help you get through the tax season with ease!

Quarterly vs. Annual Tax Payments: The Compass for Cash Flow

If you’re gazing into your financial crystal ball and see that you’ll owe $1,000 or more come tax time, the IRS expects you to make quarterly estimated tax payments. It’s like pacing yourself in a marathon—better to jog steadily than sprint and gasp for air at the end. This approach keeps the tax burden manageable and steers clear of penalties for underpayment.

Valid Tax Deductions: Your Treasure Map

To claim a tax deduction, the expense must be as common in your industry as the North Star is to navigation (ordinary) and as helpful as a sturdy ship in a storm (necessary). This golden rule is your guiding light for reducing taxable income, ensuring you only claim what truly qualifies.

Filing Deadlines: Mark Your Calendars

For the year 2024, the magic date for filing 2023 tax returns is April 15—unless you’re lucky enough to be in Maine or Massachusetts, where you get until April 17 thanks to local holidays. Circle these dates in red to avoid an unexpected voyage into penalty land.

Extensions and Late Filing: The Lifelines

Caught in the doldrums and need more time? Filing for an extension gives you six extra months to submit your return but doesn’t delay the payment due date. It’s like asking for a longer plank to walk but still having to jump into the tax payment waters by the original deadline.

IRS Audits: Navigating Choppy Waters

Facing an IRS audit can feel like spotting a storm on the horizon. Keep a logbook of your financial adventures—good records are your best defense. With accurate and honest reporting, you can weather any audit squall that blows your way.

Client Gifts and Meals Deductions: Keeping a Ledger

You can deduct up to $25 for client gifts—think of it as a small treasure chest. For meals, you can claim 50% of the cost for legitimate business dining, making detailed records as crucial as a map in uncharted waters.

Handling Lost Receipts: Your Logbook Entries

For expenses under $75, the IRS doesn’t demand a receipt, but keeping thorough records is still wise. Consider it charting the minor details of your voyage for smooth sailing through tax season and beyond.

Self-Employment Taxes: Paying Your Dues

Solo voyagers must pay self-employment taxes to cover Social Security and Medicare, on top of income tax. It’s the price of steering your own ship, emphasizing the importance of precise profit reporting.

Leasing vs. Buying: Choosing Your Vessel

Deciding whether to lease or buy for your business? Each option has its own financial and tax advantages, like choosing between a speedy sloop and a sturdy galleon. Consider your journey’s length and goals before making the call.

Health Insurance Reimbursements: Navigating Legal Waters

Directly reimbursing employees for personal health insurance is off-limits and can lead to penalties. Small businesses should explore formal plans or other legal structures to keep the crew healthy and the ship afloat.

As we hoist the sails for tax season, remember that every business journey is unique. For the most tailored advice, consulting with a tax professional is like hiring a seasoned navigator for your expedition. At Total Solutions, we’re always here to help guide you through these financial waters, ensuring your financials are prepared to make your tax season a breeze.

Happy sailing, and here’s to a prosperous voyage ahead!