Small Business Checklist for 2024
By: Financial Hotline
Winter 2024 (Vol. 41, No. 4)
Prepare to file your 2023 Tax Return. Review your accounting records for 2023 and make sure your books are balanced and all bank statements and financial records are up to date and accurate.
Gather necessary information such as your Federal Tax ID number (EIN), previous year’s tax returns, employee’s updated information, cash receipts and mileage ledgers.
Calculate expenses. It’s easy to track if your business expenses are all paid through a business account, but it doesn’t hurt to go through your personal statements as well to check for any forgotten expenses you occurred. For tax purposes, business expenses should be both ordinary (common in the industry) and necessary (essential for the business) to be deductible. Examples include but aren’t limited to: home office, supplies, rent, utilities, subscriptions, entertainment, travel, marketing, professional fees, insurance policies, and equipment.
Don’t forget your State Income Tax. The rate varies by state and may have additional local requirements.
Review your estimated taxes paid in 2023. This was required if you expected to owe more than $500 in taxes for the year. If you were required to pay estimated taxes and neglected to do so, you may end up paying a penalty.
Start 2024 Off Right!
Take note of important tax dates. Depending on your entity structure, these may include:
- Jan 31: Send W-2s and other wage statements to employees and 1099s to contractors. Submit copies to the IRS.
- Feb 28: Deadline for 1099 and 1096 information returns.
- Mar 15: Deadline to file Partnerships, S-corps, and multi- member LLCs file yearly tax returns.
- Estimated Tax Deadlines for 2024: April 15, June 17, September 16. January 15, 2025, for the 4th quarter of 2024.
- April 18: Deadline to file Single-member LLCs, sole proprietors, and C-corps (calendar year) file yearly returns.
- Sept 16: If you filed an extension on March 15, 2024, this is your deadline to file for partnerships, S-corps, and multi- member LLCs.
- Oct 15: Deadline for single-member LLCs, sole proprietors, and C-corps who filed an extension on April 18,2024.
Other important tax facts for 2024 include:
- Self-Employment Taxes: 15.3% in 2024, divided between Social Security and Medicare taxes. Applies to sole proprietors and partners actively involved in their business.
- Employment Taxes: Social Security and Medicare: Employers must deduct employee portions and pay an equal amount. Current rates are 6.2% Social Security and 1.45% Medicare.
- Federal and State Income Tax Withholding: Employers must withhold based on employee W-4 forms.
- Federal Unemployment Tax (FUTA): 6% on the first $7,000 of employee income. Some states have additional unemployment taxes.
- C Corporations pay taxes twice, once at the corporate level and again on dividends to shareholders. For 2023, the corporate federal rate is 21%.
- Flow-Through Entities (S Corporations, Partnerships, Sole Proprietorships) are referred to as pass-through entities. These get a 20% tax deduction. The income flows through to the individual owner’s tax return and is taxed at their personal income tax rate.
Review your entity structure and stock the tax forms your business will need this year to report accurately to the IRS. These may include:
- Schedule C: If you’re a sole proprietor, you use this form along with Form 1040 to report your income.
- Schedule K-1: For owners of pass-through entities like S corporations or partnerships, this form is used to report income.
- 1099-MISC: Use this form to report rental income to landlords or payments to attorneys.
- 1099-NEC: Use this form for reporting non-employee compensation.
- Form 1120: If your business is a C corporation, use this form to report income.
- Form 1120-S: For S corporations, this form is used to report income. It’s filed separately from your personal income tax return.
- Form 1065: Owners of partnerships use this information return, filed separately from their personal income tax return.
- Form 720: This is for reporting excise taxes related to your business.