Small-scale firms that have been hit with the pandemic inflation , and shipping issues have another hurdle to consider Taxes.
The tax season is a bit complicated for all however, with the April 18 deadline for filing approaches entrepreneurs, small-business owners, contractors entrepreneurs, and others must contend with an array of constantly changing rules and rules and.
In addition, many taxpayers are struggling with tax refunds and delayed returns from tax periods prior to the tax year. In addition, the Internal Revenue Service has warned of a pending backlog and has stated that additional delays are expected.
“It’s worse than it was last one,” said Gene Marks who is the founder of The Marks Group, a small-sized business consulting company located in Bala Cynwyd, Pennsylvania. “It is getting worse each year, and this is certainly is more severe than what it was in previous years.”
The IRS announced earlier this month that it was hiring 10,000 employees to tackle an unfinished backlog of 23 million documents triggered by the restriction of activities during coronavirus’s pandemic. With a shortage of staff both at the federal and state levels, CPAs have found it difficult to get in touch with anyone when there are issues or queries.
“I’ve never seen this before in my life, they’re completely understaffed and in a bind,” said Scott Orn the chief operating officer of the accounting and human resources start-up Kruze Consulting.
He also urged businesses to take their time with the IRS as well as state-level tax officials. The government’s programs during the epidemic, such as Paycheck Protection Program and Economic Injury Disaster Loans, Paycheck Protection Program and Economic Injury Disaster Loans which provided a lot of small businesses with financial assistance.
“So many businesses were spared however, the additional administrative burden was extremely difficult on the IRS as well as state tax agencies,” Orn said. “The negative consequences that come from good works have been hard to manage.”
Orn along with other tax specialists suggest filing for a extension of tax this year, as they do every year.
“We apply for an extension for each client, but they are required to be paying estimated tax all through the year,” Orn said. “It allows us to for tax preparation. There is a lot more flexibility and less pressure to complete the tax return.”
There are other considerations to consider. There’s still time to apply for the credit for employee retention. The program was launched in 2020 to assist companies during COVID it was subject to changes in eligibility guidelines several times during the outbreak, and therefore many businesses didn’t realize they were eligible. In its current form the program provided the maximum amount of $7,000 per employee. The program was meant to help employers retain employees who are on payroll. The credit expired on October. 1st, 2021 however, businesses are able to apply retroactively, by making an amendment to their tax return for payroll.
Furthermore, many companies which struggled through the year enjoyed a much better year in 2021 when the economy recovered. It could impact the tax bill that companies make all through the year.
Therefore, companies must be aware of the flow of cash and ensure they have enough cash on hand to pay for additional tax payments should they need to be able to avoid penalties.
“This season, it’s likely that there could be some surprising profits as companies end up paying more tax than they expected,” Orn said. “That’s actually a positive thing. The most important thing for owners of small businesses is ensuring they’ve got the cash flow for tax-related payments. It may be a surprise.”
In addition, small businesses need to be aware that any money obtained through Paycheck Protection Program Paycheck Protection Program or other COVID-related programs doesn’t be counted as net income for federal tax purposes. In contrast to other types of loans PPP loans are tax exempt regardless of regardless of whether they were repaid. Companies may be required to disclose certain details about the loan in the event that they were able to forgive it and they’re deducting related expenses.
Small businesses have tax-related headaches in addition to the pandemic saga
Long Island Business News