Turning the calendar to 2022 doesn’t only mean a fresh start, it also means looking back to 2021 and preparing to file your tax returns. While not a highly anticipated task, a little preparation can go a long way. We’re pleased to share three tips to ensure you’re ready for the tax filing season.
Begin compiling your data now
It is very likely your CPA will provide you with a list of information needed to prepare your 2021 tax returns. Gathering this information quickly and efficiently can result in a quicker turn-around and a more efficient tax return process. While each business is different, we recommend having the following ready for your CPA:
- Completed 2021 financial statements and trial balance
- 2021 fixed asset (i.e. equipment) additions and disposal detail
- Summary of credits and incentives earned for the 2021 tax year (i.e. Work Opportunity Tax Credits)
Additionally, we recommend identifying if you obtained any PPP loan financing in 2021 and if you have obtained forgiveness on those loans. Also have available the details on any state or local grants or Restaurant Revitalization Fund grants you may have received to ensure they are properly reported on your income tax returns.
This year, federal tax returns are due March 15th for entities that are taxed as an S-corporation or Partnership. April 18th is the deadline for C-corporations and sole proprietorships (reported on your individual income tax return). The IRS will grant an automatic six-month extension of time to file but you must pay any anticipated tax by the original due date of the tax return.
Due dates for states and municipalities vary but are generally the due date of the federal return.
Review prior year for opportunities
While 2021 has come and gone, you can still scour the year for tax opportunities that may have passed you by. For example, ensure you maximize credits and incentives that are common in the restaurant industry, including the Work Opportunity Tax Credit, Empowerment Zone Credits, and Employer Retention Tax Credits. These can still be claimed for 2021 if they had not been previously calculated.
Favorable accelerated depreciation provisions can also help immensely. If you constructed or significantly renovated any locations, a cost segregation study or review of certain repairs could provide immediate tax benefits versus deferral of deductions over numerous years.
Prepare for next year
Although tax filing season is typically a time to look back, it is also a great opportunity to plan for the 2022 tax year. This filing season, take the opportunity to discuss year-to-date performance for 2022, significant changes in the coming year, and further strategize with your CPA in an effort to tax plan effectively.
Rather than viewing the tax filing season as a not-so-fun task, use the opportunity to connect with your CPA to maximize the value they can provide, including saving tax dollars now and into the future. GBQ’s Restaurant Team stands ready to empower growth; contact them today to discuss this information in more detail.
Article written by:
Ryan Kilpatrick, CPA
Director, Tax & Business Advisory Services