What Do Small Business Owners Need to Know About Filing Their Taxes for 2021?
Did you obtain EIDL or PPP proceeds in 2021 and you do not know how that is dealt with with regards to your taxes? What are the new necessities for the submission of taxes for small companies in 2021? In fact, for Little Enterprise Homeowners Tax year delivers on a layer of stress and anxiety and additional operate. Whilst some little enterprise owners use accountants, lots of modest enterprise homeowners file their taxes on their have. In this write-up, we offer an overview of some of the adjustments which tiny business enterprise homeowners should really be aware of when getting ready to post their taxes both through an accountant or on their have.
By Thomas Tramaglini, Taking care of Director at BRP Onesta
Tax period is in whole swing. In most circumstances, corporate taxes are owing to the Interior Profits Service on April 15th. If you have an S-Company, your corporate taxes have been thanks on March
15th (unless your fiscal year is not operating on a calendar year). There have been some changes that have been built by authorities improvements or additions to laws (a lot in COVID Reduction legislation), so here is a small recap of some of the changes.
Compact Company Tax Alterations for FY 2021
American Rescue System
Credits for Paid out Depart Because of COVID Vaccines
The American Rescue Approach of 2021 offers guidance on allowing modest enterprise owners to assert refundable tax credits for their staff members. This is to reimburse them for the price tag of providing paid out sick and loved ones go away to staff due to COVID-19. This features leave taken by employees to get or recover from COVID-19 vaccinations. ARP tax credits are readily available to eligible companies who paid unwell and household go away from April 1, 2021, through September 30, 2021.
Worker Retention Credit: The American Rescue Approach extended the ERC until December 31, 2021.
PPP and EIDL
If you received Financial Damage Disaster Loan proceeds in 2021 the funds do not rely as taxable small business money for 2021. Nonetheless, it is significant to retain comprehensive documents for an audit that can be requested by the Modest Company Administration (SBA) or Division of Justice.
You can use EIDL cash to pay taxes to decreased your accrued liabilities.
Did your compact business receive a PPP mortgage in 2021? Like EIDL, the Paycheck Security Program (PPP) mortgage (forgiven or unforgiven) does not depend as enterprise cash flow and you are eligible to produce off allowable business charges, even if the PPP financial loan was employed to shell out individuals charges. Understand much more about allowable uses of EIDL and PPP below.
Electronic Payment Companies (PayPal, Venmo)
If clients fork out for expert services or products as a result of a electronic pay back support these kinds of as PayPal or Venmo and the volume is earlier mentioned $600 it should be counted as revenue. Beginning in 2022 those people digital expert services are essential to report these metrics to the IRS, and this can be an easy location for an audit.
Unwell and Family members Depart Credits
Sick and loved ones depart credits: Eligible businesses can assert refundable tax credits that reimburse them for the value of offering experienced sick and family members leave wages for workforce on leave in between April 1, 2021, and September 30, 2021, both for the employee’s have overall health requirements or to treatment for loved ones associates.
401(k) Contributions to 1 Participant or Solo 401(k)
Business owners with no personnel can lead up to $58,000 in tax year 2021. In 2022, they can lead up to $61,000 to a a single-participant or solo 401(k), with an supplemental $6,500 catchup if the owner is over 50.
Do you declare business enterprise meals? Company meals at dining establishments are 100% deductible for tax yrs 2021 and 2022 (up from 50%).
Other Tax Stuff
The typical mileage rate for enterprise use of a car or truck is 56 cents for every mile for the 2021 tax yr. In the 2022 tax yr, the amount increases to 58.5 cents for each mile.
Charitable Reward Deductions amplified: C Organizations are continue to allowed to raise the limit for funds donations from 10% to 25% for the 2021 tax calendar year.
Get Assistance if Required
If you are unsure about your tax requires, have to have to file taxes from preceding many years, or just have thoughts, please contact our workforce of advisors currently.
Dr. Thomas Tramaglini is the Controlling Director for BRP Onesta, a organization that supports compact firms. By providing a host of essential and reasonably priced providers that small business enterprise owners have a tendency to not have time to do by themselves, the crew at BRP Onesta can aid modest organizations mature infinitely. Although positioned in on the well known Jersey shore, BRP Onesta serves clientele in all 50 states, Puerto Rico, Mexico and Canada.
BRP Onesta is not an accountancy and does not give assistance on tax selections which would be greater answered by a CPA or tax skilled. In other phrases, if you have a concern, as your accountant.