This year has been a wild ride for many businesses. Our firm works with small and medium-sized businesses throughout Wisconsin, and many of them are experiencing a year unlike all others.
For some, it’s been a challenging year. The hospitality industry has been significantly impacted by customers staying home because of COVID-19, and many hotels and restaurants are facing a steep decline in revenue. In July, a large paper mill in Wisconsin Rapids shutdown, which has impacted all those who worked to supply the mill with pulp wood. In Northeastern Wisconsin, almost every business in the timber industry is affected by the overall decrease in demand for wood because of the closure.
Other businesses are doing exceptionally well in 2020. After initial uncertainty in March and April, many homebuilders and lumber retailers are having a strong year. Outdoor recreation facilities like campgrounds and golf courses are reporting business has been exceptionally good this summer.
With a little more than three months left in 2020, now is a great time to look at how the year is going for your business. If your year isn’t going exactly as planned, it makes sense to consider the tax payments you have scheduled for the remainder of the year. Most small businesses make tax payments based on the taxable income they expect to have. If your business is doing better than expected in 2020, then it may be a good idea to increase the amount of tax you plan to pay. On the other hand, if it appears your 2020 income will be less than anticipated, it might make sense to decrease the amount of tax you pay.
The IRS and most state tax authorities require business taxpayers to pay tax during the year to avoid penalties and interest. In some cases, there are certain safe harbor amounts which allow a business owner to avoid penalties and interest if the tax paid is at least as much as the tax due last year. Keep in mind, you can still owe tax even though you qualify for a safe harbor exception to paying penalties and interest.
If you have questions about the tax you pay, the professionals at KerberRose are available to help. Most business owners don’t appreciate surprises when they file their tax returns, so we take the time to understand your business and we’re here all year to answer your questions. Each business is unique, and our personalized approach makes us uniquely qualified to provide timely and accurate business and tax advice.