by Michael Whitacre, tax partner at BDO USA, LLP
Like clockwork year-end tax planning deluges into tax season, and, whether you like it or not, that means preparing, filing and making sure you are all paid up on your tax liability to the IRS. As I addressed in my previous article on corporate entities, your corporate structure will undoubtedly affect this process, from forms you need to file to determining your overall tax strategy. However, for the purposes of this article, we will focus on broad 2015 tax filing considerations.
Filing taxes is time-consuming and complex but required. Not many people like filing taxes and some use accounting firms like 3 Wise Bears to file their taxes to save them the trouble. The importance of getting taxes right should not be overlooked. Missing deadlines and must-file forms can have a material impact on your company’s bottom line. Therefore, the first thing to consider in regards to filing season is your resources. Do you have the right resources in place to effectively address the challenges and demands of tax season? And, are they capable of making strategic decisions–such as weighing the benefit of filing for a six month extension or not?
Important Last Minute Update
Congress let a number of provisions under the American Tax Payer Relief Act sunset at the end of 2013, many of which sat in limbo for nearly 12 months. However, at the eleventh hour of 2014, Congress and President Obama signed into law the tax extenders bill.
Among other anticipated extensions was the federal research and development tax credit, which was made retroactively available for the 2014 tax year.
Additionally, increased expensing limits under section 179 and bonus depreciation were also extended. This means that you can continue to take advantage of the 50 percent bonus depreciation for property acquired and placed into service in 2014. In regard to section 179, the property expensing limits of $500,000 and $2 million can now be applied to property placed in service during 2014, readjusting the limits to what they were between the years 2010 and 2013. This is a nice lift from the $25,000 and $200,000 expensing limits that would have been in place without the bill being passed.
Despite concerns that the beginning of tax season would be pushed due to the last minute enactment of the aforementioned extenders bill, the IRS has confirmed that tax season will remain on schedule with the IRS processing electronic returns beginning on January 20. For C or S corporations, return filing or extension requests must be done by March 16.
Lastly, documents and records are key to supporting your tax position. Therefore, maintenance of relevant records and documentation should be done on an ongoing basis throughout the year.
As a startup, you may be more inclined to handle most activities in house. However, it’s also important to consider whether your company could benefit from the knowledge and experience of a professional tax accountant. If you were to hire someone like a Melbourne Accountant tax return tasks will become much easier to handle.
Tax season does not have to be a headache. In fact, with the proper planning, knowledge and resources, you may emerge unscathed.
If you’re a freelancer or self-employed, you may find the services of a certified public accountant useful in the handling of your taxes. Check out accounting firms in NYC.
Material discussed is meant to provide general information and should not be acted on without professional advice tailored to your firm’s individual needs.