February 6, 2024

Essential Tax Filing Insights for Business Owners in 2024

The onset of 2024 signals the commencement of tax filing preparations for businesses throughout the
United States concerning the fiscal year 2023. It is imperative to identify pertinent deadlines and stay
informed about any alterations in legislative and tax codes that could impact both you and your company.
Seeking advice from a qualified tax professional is recommended for assistance in preparing your 2023
tax return. Meanwhile, here is a brief summary outlining key considerations for business owners
navigating the tax filing process in 2024

For Sole Proprietorships, where the business owner and the business are not separate entities, the owner is
personally responsible for all debts, losses, and liabilities. Business earnings are treated as personal
income, requiring sole proprietors to file a Schedule C (IRS Form 1040) for “Profit or Loss From
Business” by the deadline on Monday, April 15, 2024.

Most Sole Proprietorships must also make quarterly estimated tax payments, covering income not subject
to withholding, such as earnings from self-employment, investments, rentals, and retirement plans. While
state income tax due dates may vary, Sole Proprietorships generally follow the federal tax deadlines.
In General Partnerships, similar to Sole Proprietorships, there is no legal separation between business
owners and the company. Business taxes are passed through to the partners, who are treated equally by
the IRS unless specified otherwise in the partnership agreement. In Limited Partnerships (LP), there are
general partners with decision-making responsibilities and personal liability, as well as limited partners
who invest but have no operational duties or personal liability.

Partnerships use IRS Form 1065 for calculating and submitting profit or loss. The form requires listing
revenues and expenses and answering various questions about the company. Additionally, Partnerships
must file Schedule K, which categorizes income, and individual Schedule K-1 for each partner indicating
their share.

The deadline to submit Form 1065, Schedule K, and Schedule K-1 is the 15th day of the third month after
the Partnership’s tax year. For Partnerships using December 31 as their year-end, the due date is
Thursday, March 15, 2024. Partners in a Partnership, including Limited Liability Partnerships (LLP) and
Limited Liability Limited Partnerships (LLLP), are not considered employees and should not receive W-2
forms. Instead, they may receive distributions or guaranteed payments subject to estimated taxes.

Limited Liability Companies, whether single-member or multiple-member, are treated as separate entities
from their members. A single-member LLC defaults to being taxed like a Sole Proprietorship, using the
same tax forms (Form 1040 and Schedule C) and deadlines. Similarly, a multiple-member LLC defaults
to being taxed like a Partnership, utilizing the same tax forms and deadlines (Form 1065 and Schedule K
and K-1).

LLC members have the option to elect taxation as a C Corporation or an S Corporation. If the LLC opts
for C or S Corporation status, different forms and due dates apply. It is crucial for LLC members to be

aware of the chosen tax status to ensure accurate filing and adherence to the respective deadlines. Seeking
professional advice is advisable for navigating the complexities associated with different tax
classifications.

C Corporation Taxes involve distinct legal entities separated from business owners, necessitating separate
tax returns. Owners employed by the C Corporation are considered corporate employees and receive W-2
forms from the company. C Corporations following a calendar year must submit IRS Form 1120 (U.S.
Corporation Income Tax Return) by the deadline on Monday, April 15, 2024. Those with fiscal years
differing from the calendar year must file by the 15th day of the fourth month following their fiscal year’s
end. Estimated tax payments using Form 1120-W are typically required if the corporation anticipates
owing over $500 in taxes.

Corporate income taxes are subject to a flat 21% rate, and Form 1120 mandates details like the
corporation’s name, address, Federal Tax ID Number (EIN), asset list, and profit and loss information.
The final extended deadline for filing individual and corporate tax returns for the 2023 tax year, using
Form 1040 and Form 1120, is Tuesday, October 15, 2024, for fiscal years ending on December 31, 2023.
Corporations seeking an extension must make the request by the original due date of April 15, 2024.

The S Corporation, available to LLCs and C Corps through a special election, enables them to be taxed
like a Partnership (or as a Sole Proprietorship for single-member LLCs), avoiding double taxation.
Business income passes through to owners, taxed at individual rates, maintaining personal liability
protection like C Corps. Filing IRS Form 1120-S is due by Thursday, March 15, 2024 (for calendar year
corporations), with an extended deadline of September 15, 2024. For non-calendar year corporations, the
deadline is the 15th day of the third month after the fiscal year ends.

To be treated as an S Corporation, complete IRS Form 2553 within two months and 15 days of the tax
year’s start or during the preceding tax year. Late election relief is possible using Rev. Proc. 2013-30. A
reminder on 1099-NEC Forms: Businesses paying over $600 for services must distribute them to
subcontractors and vendors by January 31, 2024, for the 2023 tax year, and file Form 1096 by the same
deadline.

Key Changes for 2024 Business Taxes:

● Standard mileage rates: Increased to 67 cents for 2024 from 65.5 cents in 2023.
● Payment apps and online marketplaces: IRS delayed the requirement for 1099-K forms for digital
payments over $600; new reporting threshold phased in at $5,000 for 2024.
● Meals and entertainment deduction: Reduced to 50% for tax year 2023; entertainment expenses
no longer deductible.

● Pass-through business owners: Eligible for a 20% deduction of qualified business income with
increased income caps for 2024.
● Bonus depreciation: Decreased to 80% for tax year 2023, reducing by 20% each subsequent year.
● Section 179 depreciation: Limit of $1,160,000 for 2023; note separate limits for vehicles.
● (NEW for 2024) Beneficial Ownership Information Reporting: Mandatory for many businesses in 2024, deadlines
based on registration date, with potential fines and criminal charges for non-compliance.
● Ensure compliance with these changes for a smooth tax filing process in 2024.

Considering a Change in Business Entity Type?

While collaborating with your accountant or tax advisor to ready your 2023 income tax returns, it’s an
opportune moment to explore the potential benefits of altering your business entity type for improved
financial outcomes in the upcoming year.