You may still be in survival mode from 2020 and the upcoming tax season is no small feat. If you are a Latino-owned business or an accountant with Latino small business owners as clients, you know that the events of 2020 has had a major ongoing impact on their well-being.
For Latino-owned businesses, preparation for tax season can save both time and money. Plus, the two stimulus packages passed and understanding of their implications is critical for this year’s tax season.
(If you need a refresh, check out our Sage Advice resources on the Paycheck Protection Program).
Let’s get you up to speed. We’ve gathered some helpful tips for these small businesses as they navigate this year’s tax season.
1. First thing’s first, organize your financial and tax records
As a small business, make sure to organize all your receipts and other information accordingly. Take advantage of automation technology, like AutoEntry, to organize and secure your financial and tax record information in the cloud.
Understand all the common tax forms and records you need prior to filing your tax returns. The IRS provides a good list on their website as a starting point. Remember that if you employ workers, your business is responsible for providing certain forms to them. Ensure you provide the correct forms for the right employees.
2. Beware of possible changes to your 2020 tax return
If you received aid through the CARES Act, your tax filing may be more complicated this year than in years past. Congress has ruled that expenses made paid by the PPP loan can be deducted, so it’s imperative that those records are in order.
We highly encourage you to seek the advice of a professional tax professional or CPA if you indeed need help keeping in compliance.
The other change from 2020 is the increase in unemployment insurance. Because of the economic impact of coronavirus, millions of people received unemployment income last year. This is particularly important for independent contractors or self-employed people who aren’t usually eligible for these benefits but received them under the CARES Act.
If you are a contractor or self-employed, take this into consideration as this could result in smaller refunds or taxes owed this year.
3. It may be time to partner with a CPA
If you’re a freelancer, small business owner, or investor, partnering with a CPA is more than just getting tax advice, this expert can really help with planning for the future and business growth strategies.
For Latino-owned businesses, you may have to take into account the following priorities:
- If your primary language is Spanish, do they have someone who can consult with you in Spanish?
- Do they come recommended by other Latino-owned businesses?
- Can they make recommendations based on extenuating immigration circumstances?
Bonus tip: Join like-minded communities available that support the Latinx Community
At times, it may seem like your business may be the only one facing scary or dire circumstances. Know that you are not alone. There are resources available for small business owners who are looking for informative resources or even just a community of individuals to learn from. Here are a few we recommend:
- Latino Tax Pro
- LatinX Training Centers
- ALPFA, Inc – Association of Latino Professionals
- Contabi Alliance