Divvy, a modern payment and expense management platform for businesses, which notably secured $165 million through its Series D funding round, has published a blog post that looks into how small businesses can settle their tax payments.
Divvy confirms in its blog post that the US InternaI Revenue Service (IRS) has extended the tax deadline for this year from April 15 to May 17, 2021 for all individuals. This extension applies to self-employed workers but not small businesses, Divvy’s blog clarified.
The post added:
“The 2021 tax season is upon us, but for small businesses it seems like every season is tax season. Small businesses have regular intervals of tax filings and payments that individuals and larger companies don’t face. Rather, small businesses face a tax year full of payment deadlines. It’s important to file these payments correctly and on time, otherwise late or incorrect tax payments can incur hefty fees.”
At Divvy, the company’s mission is to assist SMEs with managing their finances more effectively so that they can enhance the efficiency of their operations.
While sharing a detailed list of the different tax filing deadlines, Divvy clarifies that only certain businesses are “required to file each tax type.”
The company’s blog post confirms that the following are due April 15, June 15, September 15, January 15 during the 2021 tax year.
Divvy’s blog notes:
“As a small business owner, you’re responsible for managing your own taxes (and those of any employees you’ve hired). Taxes can be complex, and there is a sliding scale for the amounts you’ll owe, so to make it easier the IRS has developed a pay-as-you-go estimated tax system. Businesses and individuals compute how much they’re likely to owe in corporate income tax, employment, and other applicable taxes and then divide them into quarterly estimates which are met throughout the year.”
As mentioned in Divvy’s blog post, the taxes paid by small businesses quarterly may include the following requirements:
- Income tax payments: pay-as-you-go on any income generated, including federal income tax and state (this can vary depending on your particular State requirements)
- Sales tax payments: a State tax applied to goods sold (not IRS)
- Employment tax payments: Social Security & Medicaid that’s paid on behalf of workers
- Self-employment tax payments: Social Security & Medicaid paid by self-employed professionals
- Excise tax payments: specialized taxes for various industries (for instance, environmental, gambling, among others)
- Franchise tax: required of firms with “a nexus in a particular state”
Divvy explains that these estimated income tax payments have to be made on the 15th after each quarter comes to an end: April 15, June 15, September 15, January 15. Divvy’s blog adds that “at your annual income tax filing it will be determined if you’ve paid the appropriate amount in estimated taxes throughout the year.”
(Note: for a detailed breakdown of business tax filing requirements, check here.)
Divvy aims to support small businesses with the appropriate financial tools and budget controls. As covered last month, Divvy revealed that virtual cards are becoming widely-adopted.
Divvy noted that as businesses have started moving away from legacy spending methods such as ACH or paper checks, the virtual credit card is being increasingly used to settle transactions.
The company pointed out that at the beginning of last year, physical cards were still “favored” or preferred for the majority of financial transactions. But when COVID-19 hit in March 2020, virtual card usage surged to around 50% of business credit card transactions, Divvy noted. Since that time, virtual cards have “maintained the majority usage,” Divvy claims.
As reported in January 2021, there were at least 692 finance professionals partnered with Divvy to offer “best-in-class” software to their clients. There were also 127 customers featured on Divvy billboards. The company claims that there’s now less than “1 minute average response time by Divvy customer support.”
Divvy claims that it processed 4,208 PPP loan applications, as of January 2021, for small businesses. While sharing other updates earlier this year, Divvy noted that there were 292,712+ minutes “spent reading Divvy Research and small business guides” and 1,410 customers “used Divvy’s self-guided onboarding.”