When you considered your options when it came to forming an entity structure for your business, you more than likely took the tax implications of each. Perhaps you either settled on a partnership or chose to have your limited liability company taxed as a partnership. You may have a rudimentary understanding of what that means, but as you approach your first income tax filing, you may need a reminder and/or further information about filing your company's taxes.
Numerous changes occurred regarding taxing partnerships with the passage of the Tax Cuts and Jobs Act of 2017. The first thing you need to know is that your filing date is March 15 or the following Monday if that date lands on a Saturday or Sunday. This is a full month prior to the April date most people see.
What else do you need to know?
The primary changes the act made to the taxation of a partnership or LLC taxed as a partnership include the following:
- You could take advantage of a 20 percent reduction in your net income if you meet certain criteria. This is an added business deduction, not in place of others.
- You may be able to change your accounting method from accrual accounting to cash accounting.
- Entertainment expense deductions went away, but you can still deduct up to 50 percent of most meals, but not all of them.
- The depreciation write-offs for your company's assets such as vehicles and equipment increased.
- Not all business tax credits are available such as the Work Opportunity Tax Credit.
- Your company can no longer deduct commuter benefits you give to your employees.
The above do not constitute all of the possible changes to your business's taxes, so you will more than likely need to identify others that affect it. If you need to file an extension in order to make sure your taxes are accurate, you can do so. You will need to file your company's return by Sept. 15. Since the profits and losses usually filter down to the partners or LLC members, you will need to remember to file the appropriate forms for each individual.
Before you file, you need to make sure that you gather all of the information needed in order to make sure you file an accurate return. With the new tax laws and everything you need to remember, you would probably find it easier to seek out the advice and assistance of a tax attorney who has already studied the changes to the tax code and has experience filing partnership returns.