Tax season is approaching. Here’s what you need to know when filing taxes for your small business in 2021.
COVID-19 and Small Business Tax Incentives
Lots of small businesses have been hit by the epidemic. To help these companies, the government has created some tax incentives. These incentives include:
- Paycheck Protection Program: CARES allowed small businesses to obtain a cancellable loan for salary, rent, and utility payments. This Small Business Loan that is exempted through the PPP will not be considered as taxable income.
- Coronavirus Family First Response Act: Small businesses were required to provide sick leave for employees infected with the Coronavirus. This law gives 100% tax credit for the cost small businesses incur when they provide this required sick leave.
- Employee retention tax credit: Plenty of businesses have been forced into closings to slow the spread of COVID-19. If your small business closed partially or completely due to a decrease in total receipts or a government-imposed lockdown, you can use this tax credit.
- Economic Disaster Loan (EIDL): The Small Business Administration (SBA) has expanded its EIDL program to help businesses affected by COVID-19. It should be noted that if you receive a loan through this program, you will have to pay income taxes.
- State tax exemption laws: Some states also enacted Additional tax incentives To help small businesses affected by the pandemic.
Other tax deductions
If you own a small business, you may qualify for some tax breaks or deductions. These may include:
- Business use for your home
- Business use for your vehicle
- Utilities cost
- Estimated past tax payments
At the tax authority Detailed information On what you can deduct for the tax year 2020.
Make sure to collect all of your documents
When filing taxes for your small business, you’ll need to file the following records with the IRS:
- Previous tax return
- Your payroll records
- Receipts that show your costs
- Your Taxpayer Identification Number (TIN)
- Financial data such as credit cards and income statements
File before the deadline
The IRS has it They expanded Tax return deadline for 2021. As a small business owner, you need to file your business return by the following deadlines:
- March 15th, if you are applying for a partnership, S Corporation, or multiple LLCs
- April 15, if you are applying for a Limited Liability Company or Sole Proprietorship
You should also make sure to research any changes in the law in your state before filing your taxes.