2022 Tax Deadlines for Startups

So you started a new startup in 2021? Congratulations! You’ve managed to start a company during difficult times. You have jumped through all of the legal hoops to set up your Delaware C-Corporation and maybe even raised some funding. And more importantly, you’ve probably made it to the end of the year. Now comes one of the confusing and complicated parts of running a business: filing taxes. Most businesses need to file Federal and State taxes. And in a few municipalities, you’ll have to file an additional tax return.

Sound confusing yet? It is, and that’s why you need a tax professional by your side. With that said, there are several deadlines that you need to follow in order to stay on track. Many of these are preparations for the full tax filing (often called “information returns”), others help your employees, and still more have a special purpose, such as payroll and unemployment insurance. Also, for the purpose of this discussion, we’ll assume that your fiscal year is also the calendar year. With that in mind, let’s dig in to the startup tax deadlines for your C-Corporation.

Things to prepare before end of year - 12/31/21

For experienced founders, tax preparations begin before the end of the year. One reason for this is that you want to be as organized as possible. This way, you can avoid a big scramble when some the first startup tax deadlines of the year approach. 

Last Year's Tax Returns

2020 Federal, State, and Local Tax Returns. These are important for a couple of different reasons. First, 2020 numbers help to prepare some of your 2021 tax numbers, such as appreciation of company value and asset adjustments. Second, some items from a prior year’s filings must be placed into the newest tax forms for verification. 

Financial Statements

2020 Financial Statements (Profit & Loss, Balance Sheet, Cash Flow Statement for Jan 1 - Dec 31, 2020). In some situations, your prior-year earnings will help your tax preparer determine the right numbers for this year’s filings.

EIN

Before you can file any taxes for the year, you’ll need an IRS EIN Letter. An EIN is like a Social Security number for businesses, so you need to put it on all of your business tax filings. For startups, an EIN is needed as soon as you get employees.

State Tax IDs

Assemble a list of States and State ID numbers for states where your business is registered/has full-time W-2 employees during 2021. Most of the time, this list is a combination of your 2020 list and any additions since the beginning of the year. As a startup, the chances are that you only have offices in one state. However, if you have remote employees you’ll need to check with the tax authorities in their states, too.  

Prepare for 1099s. 

Collect completed W-9 forms for all non-corporations who your business paid more than $600 during 2021 (includes but is not limited to law firms, landlords, and contractors who were paid via ACH or wire). Briefly, a W-9 form is an information return that gives you the information needed to file a 1099. For instance, an individual’s SSN or the EIN for a partnership. 1099 filings are in the first startup C-Corp tax deadline group, so it’s important to be ready.

At beginning of next year - 1/31/22

Once the year has ended, your bookkeeper or accounting department will start preparing for the first startup tax deadlines. For nearly all companies, the first step is to finalize the year’s revenues, expenses, and other financial information. Typically, the data gathering starts the first week of January. Here’s what you’ll need to file taxes.

Financial Statements

The first thing you’ll need is this year’s Financial Statements (Profit & Loss, Balance Sheet, Trial Balance, and General Ledger for Jan 1 - Dec 31, 2021). Let’s break these items down into manageable pieces. 

Your Profit &Loss (P&L) statement, also called an earning statement, simply outlines the revenues your business has, along with the costs and expenses incurred. For instance, revenues can be from sales, royalties, or subscriptions. Costs/expenses can include rent/utilities, merchant fees from payment providers, and wages.

A company’s Balance Sheet is a slightly different accounting report than the P&L. That’s because the information included is more than just earned income (profits). Balance sheets include investor cash infusions, assets, and liabilities. Liabilities are usually debt payments, such as an SBA loan or credit card bill.

For startups, a Trial Balance helps the tax accountant ensure an accurate income tax filing. Trial Balances are similar to a balanced check register: they list payments and deposits, hoping that these numbers are equal. If they’re unequal, there needs to be an explanation, such as overdue receivables.

Cap Table

Finally, to make the startup tax deadline, you’ll need a Cap Table as of December 31, 2021. What is a cap table? Simply put, this is a statement which says who has equity in the company. This can be through securities, stock options, or similar facilities. You’ll also have to say how much of each item has been issued, how much they’re worth, and what percentage of the company they represent.


Tax Forms to Employees and Contractors - 1/31/22

Once you have the financial statements ready, you’ll need to meet the first startup C-Corp tax deadline. This is a series of payment information for employees and contractors.

1099 forms

List of all non-corporations who your business paid more than $600 during 2021 (includes but is not limited to law firms, landlords, and contractors who were paid via ACH or wire), and total amounts paid with Tax IDs . Then, you’ll need to send them the appropriate 1099 form or forms, as applicable. You can find a list with the forms on the IRS website or ask your tax professional.

W-2 Forms

If your business has employees, you’ll need to send a W-2 form to each of them. These will show the employee how much money they made, and how much tax you withheld, among other datapoints. It’s essential for their tax filings.

Health insurance information

If your startup has employees, you’ll need to provide them information about the health insurance your company provided them (or didn’t). The forms needed are 1094b and 1095-b. These help your employees file their taxes by indicating you have provided them with health insurance that meets government guidelines.

Information Returns to the IRS - 2/28/22 or 3/30/22

While you must send information returns related to wages, payments, and health insurance to employees by the end of January, you have another month or two to send them to the IRS. For paper filings, the due date is Feb. 28 for these forms, and Mar. 31st for electronic. You can get an extra month added to the startup C-Corp tax filing deadline for any of these forms by filing a form 8809.


Delaware Franchise Taxes - 3/1/22

If your like most startups, your C-Corporation is incorporated in Delaware. Many states have a franchise tax. This is simply a fee, often based on stock or revenue, that pays for the privilege of doing business in the state. Usually this is paid where you are registered, but it’s important to know what the rules are for your respective state. Delaware and most other states require this by March 1. Then, you’ll make payments on that tax throughout the year depending on your state’s schedule.


General Federal and State Tax Filings - 4/15/22 or 10/15/22 if extended

As with individual tax filers, the biggest startup C-Corp tax filing deadline is April 15th. This is the day when you must file your main tax form, but there are other filings due as well.

C-Corp tax return

For C-corporations of any size, the main form for taxes is 1120. This is similar to the individual 1040 in terms of what it asks, but the items are corporation-specific. Your tax preparer will need all the financials and information returns to prepare it.

Estimated income taxes

Your first estimated tax due date for 2022 is due on April 15th, just like it is for individuals. You’ll also pay this amount on July 15th, October 15th, and January 15th of 2023. The form for corporate estimated is the 1120-W.

Employer’s tax return

Every quarter, you’ll send in taxes withheld from employee paychecks and payroll tax to the IRS. This is done on the 15th of each month following the end of a quarter. So, the dates are April 15th, July 15th, October 15th, and January 15th of each year. Each time, you’ll file form 941 with payment. Do you qualify for the research and development credit? You’ll file for that here, too.

As you can see, there’s more to the startup C-Corp tax deadline than just April 15th. However, it’s nice to know that many of the deadlines are tied to individual filing deadlines. For instance, the requirement to send 1099 and W-2 forms by the end of January makes it easier for them to file taxes. But you don’t have to send the final copies to the IRS until later. That allows for you to make adjustments as needed. Likewise, having estimated and employer taxes due on the same dates makes it easier to remember. For a busy startup leader, that’s always important. Of course, if you have questions be sure and reach out to your tax professional for advice.



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