The extension of Tax Day 2021 to May 17 may be a big sigh of relief for many taxpayers, but it’s not likely to affect your small business’s 2021 tax preparation and payment obligations. There’s a big difference between what an individual taxpayer or employee has to file and the complex bookkeeping operations necessary for your small business to properly file and pay its taxes on time.
The COVID-19 pandemic compelled the government to create many new benefit programs for small businesses, most notably the Paycheck Protection Program (PPP) loans that could be forgiven. But some of last year’s relief measures could present tricky tax challenges when you prepare your taxes, and online bookkeeping can solve many of your tax preparation questions.
Tax time is all year long for your small business—you have to track revenue and costs for your taxes year-round. Let’s look at the types of taxes you need to pay, when you need to pay them, and how to get effective and affordable tax preparation help. Because this year, more than ever, you can’t afford to incur too large a burden or to miss any possible tax breaks.
Every business pays income tax. But different types of taxes will constitute how your business calculates that income tax, depending on how your small business is structured. You may run a small business with employees, you may be self-employed, or you may operate a limited liability corporation (LLC) or some other form of corporation.
Your income taxes will be a combination of your business’s estimated taxes, employment taxes or self-employment taxes, and other types of taxes that could apply to your small business.
Most small business owners are required to pay their own personal estimated tax, not that of their business. Self-employed business people, sole proprietors, and 1099 workers also pay estimated taxes, as do corporations.
The IRS has a webpage describing what types of taxes small businesses pay. Here’s what you’re required to pay, depending on your business’s legal classification.
Self-Employed and Sole Proprietors:
Small Businesses with Employees:
LLCs, Corporations, C-Corps, and S-Corps
*Certain specific types of businesses have to pay excise tax on distinct types of goods and services like gasoline, coal, or wagering. The IRS has a list of what types of businesses owe excise taxes and which forms they need to complete.
We’ve got tax preparation resources for whatever type of small business you have. Check out our tax tips for sole proprietors and guide to lowering your self-employment taxes. We also have a tax guide for LLCs and corporations.
Many small businesses are required to pay some of these taxes quarterly—that is, on 4 tax deadlines spread out over the course of a calendar year. Other taxes are filed quarterly as well as being paid quarterly. The due date and filing deadlines on these taxes of taxes depend on the type of tax, and these dates are listed below.
Estimated Taxes – If you’re a sole proprietor, self-employed, or a small business with employees, you only file your income taxes once a year. But you have to pay estimated taxes 4 times a year. Here are your quarterly estimated tax due dates, and none of these are affected by the May 17 Tax Day delay:
If your business is a corporation, these due dates depend on when you begin and end your fiscal year. Your quarterly estimated taxes will be due on the 15th of the month on the 4th, 6th, 9th, and 12th month after your corporation’s fiscal year ends.
Employment Taxes: If your business has employees, you must file and pay employment taxes on a quarterly basis. These are your quarterly employment tax deadlines for 2021.
This sounds like (and is) a lot of work. But we have tools to automatically calculate your estimated taxes to help you easily pay these taxes on time.
There is also the inconvenient matter of your state taxes, which you owe on top of your federal taxes. States differ broadly on what types of taxes they charge their small businesses. Depending on your state, these could include sales taxes, property taxes, or other various forms of state taxes.
We cannot fully explain all required state taxes for all 50 states in the US, but we can direct you to this IRS list of state tax laws for all 50 states that will provide the link you need to help determine that state taxes for the state where your small business is located.
The Sunrise digital bookkeeping platform can simplify your small business’s finances and save your business money. And it comes with a tool called Sunrise Tax Assist that seamlessly integrates your bookkeeping into your tax preparation to make tax prep simple.
Sunrise Tax Assist prepares a tax checklist that lets you know everything you need to prepare this year’s taxes. It keeps centralized tax documents so everything from 1099s to expense reports is easily accessible—just one click away. And a tax estimator will automatically anticipate your small business tax burden so there aren’t any surprises.
You can sign up for Sunrise for free to simplify your small business’s bookkeeping and tax preparation. Sunrise also has a mobile app for iOS and Android that helps you access these tools from anywhere. Because it’s great to have a tax assistant or bookkeeping specialist this year, but it’s even better to have one that you can use electronically instead of meeting in person.