What Your CPA Wants You to Know
A podcast for entrepreneurs! We are a husband and wife team running our CPA firm together. We know just how difficult it can be to take your business dream to a reality. Our mission for this podcast is to guide, empower, and educate entrepreneurs in an easy-to-understand way! We want business owners to have the information that they need when they need it, AND without the hefty accounting invoices from a CPA! Follow along for practical advice, tips, and tricks from a CPA who knows what it is like to run a business, and strategies to keep your business thriving from an MBA! We will also show you how to run a business while keeping your family and sanity intact along the way!
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What Your CPA Wants You to Know
91. Business Owner's Guide to a Smooth Tax Season and End of Year Filings
Tax season is here and this episode delivers our help to navigate it successfully. We discuss critical deadlines, necessary filings, and how to prepare efficiently for your taxes while avoiding common mistakes. We cover all the questions that have been hitting our inbox this week to help you get 2024 wrapped up and organized to file your tax return!
• Importance of early preparation for tax season
• Key deadlines for end-of-year filings like W-2s and 1099s
• 1099 requirements and deadlines
• Using QuickBooks and digital tools for filing
• What documents to submit to your CPA
• Important tax due dates
• Tax extensions and penalties
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So if you owe money, the IRS doesn't care if you extend, but you still have to pay by April 15. And I know that sounds silly, because people always say how do I know how much to pay? And the IRS says you have to guess. And if you guess incorrectly and you don't pay enough, they'll penalize you and charge you interest and penalties on the amount that you owe. But even then the amount you paid will drastically reduce the interest and penalties because those are only charged on the amount that you still owe after April 15th. Welcome to what your CPA Wants you To Know.
Speaker 2:Tax and accounting help can be expensive, so we've created this podcast to help guide you through it all and make you feel like you have a CPA in your back pocket.
Speaker 1:I'm Carson Sands.
Speaker 2:And I'm Taryn Sands.
Speaker 1:I'm a CPA with over 10 years of experience helping people start and grow their businesses.
Speaker 2:And I'm an MBA with a specialization in marketing and entrepreneurship. Taxes suck and we want to make sure you don't pay more than your fair share.
Speaker 1:We're here to share everything your CPA wants you to know in a fun and easy to understand way. Let's get started.
Speaker 2:Let's do it. So I snagged Carson today for an episode, so he is here and accounted for today.
Speaker 1:Present.
Speaker 2:He actually has no idea what the podcast episode is going to be about. I just said can you please run in here and help me record a podcast episode very quickly, so he doesn't even know what we're going to be talking about today.
Speaker 1:Is it how to perform triple bypass heart surgery?
Speaker 2:Yes, exactly.
Speaker 1:Perfect.
Speaker 2:Well, I'm sure you guessed. It's something you can talk about, so you don't have to be prepared. You're ready to go.
Speaker 1:All right.
Speaker 2:But, like I said, it's been really hard for us to figure out time to record the podcast with all the things. So we don't know how the podcast is going to be for 2025. So stay tuned for that, but we've got to make some changes for sure.
Speaker 1:There will probably almost certainly be fewer episodes during tax season, at least this year, but if you have questions, you should go back to our old episodes. We have covered so many topics and, while a few of the tax laws have changed and some of them might not be relevant anymore, I would say 95% of the information out there is still completely relevant to today's tax rules.
Speaker 2:So, absolutely, I feel like we've covered all of the like questions that we get all the time, because it's so helpful for us to send those to like our clients or people asking on Instagram, and we have almost 100 episodes, so I'm proud of us that we have that many and if anything does pop up, that's super important. We definitely plan to do a new episode on that, but for now, we're going to be slowing down and we just don't even know what that looks like yet. So stay tuned for that. And in case you were wondering, carson, today's episode is all about tax season, getting ready for it and the questions that we're getting. So I just put together all the questions that I've seen come in just this week and we're going to go through them very quickly and I'm going to have you answer them.
Speaker 1:What's tax season?
Speaker 2:He's got jokes but they're not very funny because tax season has already started. And that's his brain right now. All right, moving right along. The first question is what all are the end of year filings that are due like right now? All right, moving right along. The first question is what all are the end of year filings that are due like right now, in January? So if maybe someone's new to all of these filings or they just need a refresher, what are on business owner to-do list right now?
Speaker 1:Okay, the first thing I would think of is January 15th. Estimated tax payment number four is due. This would still be for the 2024 tax year, but you actually have until January 15th of estimated tax payment. Number four is due. This would still be for the 2024 tax year, but you actually have until January 15th of this year 2025, to make that fourth quarter estimated payment.
Speaker 2:So that's coming up. Last thing you need to do for 2024 for estimated tax payments and what else.
Speaker 1:Another deadline is that if you file your tax return on time and by that I mean very early by January 29th, sometimes they let you skip that January 15th estimated tax payment and you can pay with your tax return. But they give you a very small window because the opening day for tax season is January 27th and you would need to have it filed by January 29th.
Speaker 2:Which, let's be honest, we don't know if that's for sure going to be the case. They say that that might be open 27th, but they might push it.
Speaker 1:Oh no, the IRS has never lied to us. There are benign, beneficial helpers.
Speaker 2:Oh my gosh. Okay, it might be the 27th, it might not be, so you cannot file a tax return yet for 2024. File a tax return yet for 2024. And the other filings that you probably have already done or know about, but we'll mention, is you've got to do the W-2s and your 941 and your 940, which 940 is just the yearly one, so that's just done once a year.
Speaker 1:For unemployment tax.
Speaker 2:Yes, all of those things are going to apply to you if you have payroll, so that's not going to apply to you. If you're just a, so that's not going to apply to you. If you're just a sole proprietorship and you have a Schedule C on your tax return, that doesn't apply. But what does apply is sending out 1099s. So who needs a 1099? What are the rules on that? Give us a quick answer on those.
Speaker 1:Okay. So this is a big one and that is due January 31st to the people you give the 1099s to. There's been some misinformation I won't say misinformation, confusing information out there where people have said 1099s are due February 28th or March 15th. If you e-file, that's when the electronic copy that the IRS has to get is due, but that is not when the recipient copies are due, the recipient being the person that you actually are giving the 1099 to. So those are due January 31st. And for a 1099-NEC form, this would be contract labor, people that work for you, that do various things for you. So that would be anybody that is paid over $600 for the year it's actually $600 or more. So even if it was exactly $600, they would have to get a 1099. And also, they're not a corporation.
Speaker 2:Right. So there's about a million other questions you could ask about this. We do have a 1099 episode that you can go back to. It's going to go into a lot more detail on that, so if this is your first time filing, I would suggest going back to our old 1099 episode from last year. Now another question I got was can you do it in QuickBooks? Yes, you can. If you have all the information and put there, and it's correct, you can file 1099s in QuickBooks if you're using that. If you don't have it in QuickBooks or you're not using QuickBooks, we use a site called yearlycom and you can file that there. So all you need is the information for the person you're sending it and then you need the amount paid. So if you have that, you can go on there, file it. It will mail them a copy and it will submit it with the IRS. So you'll be good to go.
Speaker 1:That's Y-E-A-R-L-I.
Speaker 2:Yes, yearly, with an I, and we use it. It's easy. We tell everybody to use it. So if you don't have a way to do that, you can do it on there. I promise you it's very simple.
Speaker 2:The next question that came up is what do I need to file my tax return as a business owner? And Carson's giving me the face like oh my gosh, there's so many things. So, yes, right now is the perfect time to start preparing to do your tax return. But for a business owner, you have to have your books ready to go, and that means, if you're using QuickBooks, they have to be categorized and reconciled through the year and you need your assets together and you need to have your mileage, if you have any business miles. So there's a lot of things, actually, and we do have a checklist. It's on our Instagram. It will go through every single thing that you do need.
Speaker 2:So what we want to take home from this episode is that make sure that you've done all the things on the checklist before contacting your CPA or sending them part of it, because you don't want to send them half of it and not be ready and then send them part of it. So no piece mailing, and the reason for that is that they will work on your return if they think that it's ready, and then it's actually not ready. So to make sure you're not getting charged for extra time or anything, just make sure that you have everything ready to go. So check out the checklist. And then the other question that came in along that lines was do you need receipts to go along with all of those things in your QuickBooks?
Speaker 1:Never.
Speaker 2:The answer is a hard no. We don't want your receipts. You don't need those. If you are giving your accountant your books, however you're giving them, you do not need the receipts to back them up. Your accountant is not the person that is checking to make sure that you're not lying. That is not their job. But you would need those if you were to be audited so you can save them, but don't give them to your CPA.
Speaker 1:So I guess, to be more specific, we don't need them. You might need them if you get audited, but we don't need them.
Speaker 2:We'll take your word for it. Yeah, For your tax return. You don't need to drop off all of your receipts to your CPA to back up your books.
Speaker 1:Right, there are ways to upload your receipts into QuickBooks. If you have them and you're afraid they're going to fade or that you're going to lose them or something like that, then there are ways to take pictures and upload those and attach them to the transactions. I wouldn't recommend doing it for every single little transaction that you have, but if it's a major purchase or something that you're afraid the IRS might not believe was actually business related without the receipt, then that's one way to do that.
Speaker 2:Absolutely. So you're going to do all of those end of year filings for to wrap up 2024. Then you need to get your books in order, reconcile, categorize, do all the things, go through the checklist so say you've done all that and you make sure that you don't send your receipts to your CPA. What are the actual due dates? So can you go through those? Because a lot of people are confused. Maybe their first year filing for their business.
Speaker 1:Yes. So if you're filing an S-corp or a partnership return, then that's due March 15th, so that's a month earlier than the typical April 15th due date when your individual personal tax return is due. The reason for that is they wanna make sure that there's time for you to get your K-1 from those partnerships or S-Corps and report that on your personal tax return. Now, april 15th, of course, is the due date for your 1040, which is your individual tax return filing, the 1041, which is filed for estates and trusts, and for the 1120 for C corporations. This would not be S corporations, this would be C corporations, which are tax paying corporations.
Speaker 2:Yeah. So, as you can see, that can be confusing because if you're used to just filing on April 15th, if you have a business that files a business tax return that's a partnership or an S corp you actually have another due date and it's a month before. So, especially if you have partners and everybody is on you because they actually need that return to be wrapped up before they can file their personal tax return. So just be aware of that, it comes quick.
Speaker 1:And tell your friends that have an S-Corp or a partnership, because if they don't listen to this and they're not on our mailing list, they might not know. I had a client just today tell me who is an S-Corp for the first time this year. That, hey, I didn't know the due date was March 15th until I got your newsletter that you send out that has that information on there. So people are reading those and we try not to bombard people with that and only put important information on there that helps people so that people don't unsubscribe. So it was nice to hear that somebody actually read it and found it useful and was like, okay, now I'm not finding this out two weeks before March 15th.
Speaker 2:I know months ahead of time and I can plan for it Absolutely, and that's happened a lot, especially new S Corp owners. They are always surprised by that. So March 15th is coming very quickly, so be ready for that. If you are not prepared like and then you're going to, you know already I'm filing an extension. This is the next question that's been coming in. What happens if I file an extension? Like what is it bad? Is it good? A lot of people have never filed one, so they don't know how it works. So there's some very important information that you definitely need to know if you're going to extend.
Speaker 1:You usually only have to give up one of your children in order to extend, and that will buy you six months of time.
Speaker 2:All the jokes today. What will really happen?
Speaker 1:Well, when you extend your partnership or S-corp return, absolutely nothing happens.
Speaker 2:But if you don't file the extension.
Speaker 1:Then you get penalized severely.
Speaker 2:Yes, you will get a big penalty letter if you didn't file the extension. So make sure that you get that filed if you need more time. And then the other part of this that people don't often understand if you can explain what happens if you file personally.
Speaker 1:Ah, now we get to the April 15th deadline and that extension. Whether it's for your personal return or for a C-Corp return, both of these people pay taxes. So if you owe money, the IRS doesn't care if you extend, but you still have to pay by April 15th. And I know that sounds silly, because people always say how do I know how much to pay? And the IRS says you have to guess. And if you guess incorrectly but you pay too much, that's okay, they'll give you your money back.
Speaker 1:If you guess incorrectly and you don't pay enough, they'll penalize you and charge you interest and penalties on the amount that you owe. But even then, the amount you paid will drastically reduce the interest and penalties because those are only charged on the amount that you still owe after April 15th, if that makes any sense. So if you owed $10,000, you didn't know how much you were going to owe, but you paid an, and then when you go to file it turns out you owed 10, well, you're only going to get penalties and interest on the 2000 that you still owed after April 15th, which is much better than what it would be exactly, and that confuses a lot of people.
Speaker 2:I get it, but an extension that you file is an extension to file your return, not an extension to pay. They want their money on April 15th, no matter matter what.
Speaker 1:And here is something people always ask them why do we file the extension at all? Why do we bother? So the penalties are there but they're not nearly as high. Just to give you the quick math on that, it's about half a percent. It's less than 1% per month in penalties whenever you extend but you don't pay. So let's say you do file the extension but you don't pay the amount you owe, and it's less than 1% per month. But if you don't file the extension, whatever amount you owe, it's 5% per month. So the penalties can stack up really quickly.
Speaker 2:So you absolutely want to file their goofy extension. You got to get it filed, yes.
Speaker 1:Even if you're like well, I don't want to file the extension because I don't have the money to pay right now. No, no, no, you need to file the extension and then just don't pay. At least the penalties and interest will be much lower this way.
Speaker 2:Exactly so. The last question on the list that keeps coming in is how do I get my tax documents to you? And I thought we would cover this because this is new to us. This year we're not accepting paper tax documents for many reasons, but we've let a lot of people know that, thinking you know maybe it will inconvenience some people, but the response has been yeah, you know, my old CPA used to do that. We're just going in that direction anyway. So if you don't have a scanner or whatever, we're going to talk about that today so you usually can either email those over or some accounting firms have like an upload that you can do. We're just moving in the direction of not dropping off like a box or a shoebox of documents to your tax preparer. So if you're not going to drop off your documents and that's new to you and you're trying to change over what else can you do? And what we're having our clients do, if they don't have a way to scan in their documents, is to use an app called Genius Scan. It's a free app. The little icon on your iPhone is orange and it's very, very easy to use.
Speaker 2:Now, if you're thinking, I have so many tax documents like receipts and stuff. Well, now you learn that you don't need all those receipts. So usually when I get a big box to scan, it's because someone dropped off a ton of receipts. So, step one go through the tax checklist that you can find on our website or on our Instagram page. Go through that and use Genius Scan to scan it all into one PDF. And the good thing is it's way easier for your CPA to look at and use to do your tax return and you'll have it all there in a PDF. And then another good thing for us is that it's not in some weird format, because sometimes when people try to send us stuff, it comes over in a weird format, like a video format or some sort of picture that our software won't use and we have to, like go back and forth. So if you do use Genius Scan to get all of your tax documents into one PDF, it's so nice and easy.
Speaker 1:Yes, whatever format the pictures are in. When you take a picture with your iPhone instead of actually scanning with an app, it's not always possible to open that on a Windows computer.
Speaker 2:Yeah, we're pretty tech savvy, but our software doesn't like a lot of those forms, so an easy PDF is so much better and so much easier on us.
Speaker 1:And also keep this in mind just because you received a paper copy doesn't mean that there's not a digital copy out there for you somewhere. Almost every bank or financial advisor, or whatever you want to call it you know your employer that sends your W-2s. Almost every single one of them will have these available for you in electronic format already. They just sent you a paper copy as well because you didn't check some box saying I don't want the hard copy.
Speaker 2:Absolutely. You can usually download those online as long as you're able to log into your account. So if your CPA does the same thing, then try using Genius Scan, and that is all the questions that we have for today, so until next time. Thank you so much for listening to.
Speaker 1:What your CPA Wants you To Know.
Speaker 2:Podcast.
Speaker 1:This podcast is intended to provide accounting and tax information for educational purposes only. All tax situations are unique and should be handled with the assistance of a tax professional.