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2024 Tax Planning

FAQ - frequently asked questions

2024 Tax Planning

For the remainder of 2024 we are engaged in tax planning for our current clients.

Call our office at 406-281-8988 to schedule your 2024 Tax Planning Meeting

Frequently Asked Questions

Following are ten of the most frequently asked questions we have fielded by both clients and prospects:

What are the different types of business taxes?

What tax forms do I need to file for my business?

How can I reduce my business tax liability?

What expenses can I deduct on my business taxes?

How should I handle taxes for employees and independent contractors?

What is estimated tax and how do I pay it?

What records do I need to keep for tax purposes and for how long?

What are the tax implications of different business structures?

How does the tax treatment of business assets work?

What should I do if I can't pay my taxes on time?

The main types of business taxes include income tax, self-employment tax, payroll tax, excise tax, and sales tax. Depending on your business structure (sole proprietorship, partnership, corporation, etc.), you may be subject to different combinations of these taxes.

The required tax forms vary by business structure. For example:

• Sole proprietorship: Form 1040 with Schedule C
• Partnership: Form 1065
• Corporation: Form 1120
• S Corporation: Form 1120S
• LLC: Depends on how it’s taxed (could be 1040 with Schedule C, 1065, or 1120)
  

Common strategies include maximizing deductions, taking advantage of tax credits, contributing to retirement plans, depreciating assets, and managing the timing of income and expenses.

Deductible business expenses typically include rent, utilities, payroll, office supplies, travel, advertising, and other necessary operational costs. Specific rules apply, so it's important to keep detailed records and consult the IRS guidelines or a tax professional.

For employees, you need to withhold income tax, Social Security, and Medicare taxes, and file quarterly payroll tax returns. For independent contractors, you usually need to file Form 1099-NEC for any payments over $600 in a year.

Estimated tax is a method used to pay tax on income that isn't subject to withholding. Businesses often pay estimated taxes quarterly using Form 1040-ES or 1120-W, depending on the business structure.

Keep records of income, expenses, payroll, and assets for at least three years, though some records (like property records) should be kept longer. The IRS recommends keeping employment tax records for at least four years.

Different structures have different tax obligations:

• Sole proprietorship: Income taxed on the owner's personal return.
• Partnership: Income passed through to partners and taxed on their personal returns.
• Corporation: Subject to corporate income tax, and dividends taxed on shareholders' personal returns (double taxation).
• S Corporation: Income passed through to shareholders and taxed on their personal returns, avoiding double taxation.
• LLC: Taxed as a sole proprietorship, partnership, or corporation, depending on elections made by the LLC and its members.
  

Business assets like machinery, equipment, and buildings can be depreciated over their useful life. Depreciation reduces taxable income each year. The IRS provides guidelines on how to depreciate various assets.

If you can't pay your taxes on time, file your return on time and pay as much as you can to reduce penalties and interest. You can then set up a payment plan with the IRS or explore other options like an Offer in Compromise.



*For specific advice tailored to your business, it's always a good idea to consult a tax professional or accountant.