Understanding Tax Deadlines as an Auto Repair Shop Owner

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Hey, auto repair shop owners! With January behind us, it means one thing is coming down the pike: tax season.

 

Before you grit your teeth at the thought of filing, it’s important for you to  understand that staying on top of your tax obligations is crucial for the health of your business. And, as always, we’ve got your back, which is why we’re here to break down the key tax deadlines you need to keep in mind, especially as we move through the year.

 

Keeping your taxes in order is like keeping your shop organized. A well-maintained shop runs smoothly, and so does a business with its tax ducks in a row. In this blog article, we’re diving into some important deadlines to keep you on track.

 

Quarterly Estimated Taxes (Form 1040-ES)

If your business is a sole proprietorship, partnership, or S corporation, and you expect to owe at least $1,000 in taxes, you’ll likely need to pay estimated taxes quarterly. 

This is because taxes aren’t automatically withheld from your business income like they are from a paycheck. Think of it as paying your taxes in installments throughout the year.

• 1st Quarter (Jan 1 – Mar 31): Due April 15, 2025
• 2nd Quarter (Apr 1 – May 31): Due June 15, 2025
• 3rd Quarter (June 1 – Aug 31): Due September 15, 2025
• 4th Quarter (Sept 1 – Dec 31): Due January 15, 2026

Missing these deadlines can result in penalties, so bookmark this post and add those dates to your calendar!

 

Employer Taxes 

If you have employees (and most repair shops do), you have additional tax responsibilities.

These taxes are typically deposited either monthly or semi-weekly, depending on your total tax liability. The IRS provides specific guidelines on deposit schedules, so it’s essential to understand which one applies to your business. Form 941 (Employer’s Quarterly Federal Tax Return) is used to report these taxes. The due dates for Form 941 generally align with the quarterly estimated tax deadlines mentioned above.

Employer taxes include:

Federal Income Tax Withholding 

You’re responsible for withholding federal income tax from your employees’ paychecks and depositing it with the IRS.

 

Social Security and Medicare Taxes (FICA) 

You withhold these taxes from employees’ wages and also match the amount.

 

Federal Unemployment Tax (FUTA) 

You pay this tax to fund unemployment benefits for workers who lose their jobs.

 

Annual Tax Returns 

Of course, we can’t forget about your annual tax returns. Depending on your business structure, you’ll file different forms:

• Sole Proprietorship: Schedule C (Form 1040) is filed with your personal income tax return.
• Partnership: Form 1065 (U.S. Return of Partnership Income) is filed to report the partnership’s income and losses. Partners then report their share on their individual tax returns.
• S Corporation: Form 1120S (U.S. Income Tax Return for an S Corporation) is filed to report the corporation’s income and losses. Shareholders then report their shares on their individual tax returns.
• C Corporation: Form 1120 (U.S. Corporate Income Tax Return) is filed to report the corporation’s income and pay corporate income tax.

 

The deadline for filing these returns is generally April 15th for individuals and partnerships, and March 15th for S corporations and C corporations (unless you file for an extension).

 

State Taxes 

Don’t forget about state taxes! 

These vary depending on your location but can include state income tax, sales tax, and unemployment tax. Be sure to check with your state’s tax agency for specific deadlines and requirements.

 

Keeping Your Taxes Organized 

Keeping accurate records throughout the year is essential for meeting these deadlines and ensuring you’re not overpaying or underpaying. 

This includes tracking income, expenses, payroll, and any other relevant financial information. Cloud-based accounting software can be a lifesaver here, making it easy to track your finances and generate reports. QuickBooks Online is the software we always recommend!

[Brian Smith]

I can't tell you how much tax season sucks. Thank god for accountants, they are my best friend when it comes to tax season. Running our auto repair shop is one of the enjoyable experiences of my life except when the tax man shows up 😂. It's all good and well though.