What You Need to Know About Your 2020 Taxes

“Today, it takes more brains and effort to make out the income-tax form than it does to make the income.”

-Alfred E. Neuman

Of course like all other things 2020 has given us it will also make our tax returns more complicated as well!

There have been so many great programs released this year to give relief to small business owners but unfortunately they will come with their own set of tax complications. 

We want to make sure you are prepared but please discuss the details with your tax accountant.  . 

Again we have discussed the bookkeeping best practices with our tax partner and we have agreed that all  PPP loans should be categorized as other income and the associated expenses in which the funds were used will be classified according to how the dollars were spent. 

Simply said: If you used the funds as payroll, rent and utilities you should be categorizing them in those appropriate categories and your loan will be categorized as other income. When you file your tax return your tax accountant will handle the reduction of each tax deduction on the return. 

We believe that this will be the best way to maintain the integrity of your bookkeeping for financial analysis while accommodating your needs to file your return. 

As always we believe that it is SO important to maintain consistent and accurate bookkeeping so that you can review your numbers and make data driven decisions to grow, pivot and maintain your business. 

These guidelines are only for taxpayers who reasonably expect to receive forgiveness of the covered loan, if you have not spent funds on qualified expenses your loans may not be forgiven. 

This decision by the IRS is not final and may be revised but we want you to be prepared with the proper tax savings as the current status will increase the tax liability for business owners. 

Grant: The grants or EIDL advance will be considered taxable income and will be included in your tax estimate. If you spent this money on business expenses you will be able to take the business expenses. 

As a business owner, you are responsible for federal, state, and local tax requirements. As of now the filing deadline for partnerships and S corporations is March 15th, 2021. Individual and corporate tax returns must be filed by April 15, 2021.

While Kickstart Accounting Inc, specializes in preparing your business’s bookkeeping records and helping you know your numbers to not only bring home a bigger paycheck but to also make the tax filing process as painless as possible. Our tax partner Sarah A Fox CPA is the expert when it comes to all things taxes! Visit here to contact Sarah for your 2021 taxes.