Tax season is here and with the headaches that come with it too. It is not a very popular time of the month except for accountants for many reasons among individuals but for businesses it’s one of the most stressful times of the year. Not only do you have to prepare your own individual taxes but also that of your business and collecting all the necessary documents like receipts and returns can be a very tedious process even for the most organized business owner. If you want to avoid the hassle here are a couple of things that you should know that would help make the process much smoother for you this time.
One of the most important things that tax preparers should know is that tax lies are always being revised. This year for example business partnerships are now required to file their returns by March 15 which is a month earlier than the deadline for the previous year. With constant changes being made in tax laws it could be hard handing in those documents on time. One other revision made by the government requires that businesses submit their 1099 forms and W-2’s to the IRS by the end of January even though just a year before they were permitted to hand them in by the end of February and failure to do so would result in penalty fees. This change has forced some business owners to rush to get important information from their employees in order to get everything done on time.
Some businesses have seen an increase in the cost to collect their returns to file for the federal government with one of the reasons being the extra paperwork that comes from other recently changed laws like in healthcare which have resulted in more forms being filled out. With this in mind the best thing for you to do is manage your expenses and one way you can do this is by keeping track of what you can write off as a tax deductible. It’s easy for business owners to forget to add the little things such as deductibles in their book keeping records which is why learning to check your books periodically to make sure your expenses are written in correctly would keep you from scrambling for those same expenses when tax season is in full swing because the last thing you want to do is tear your office cabinet apart looking for them. Regularly consulting your accountant is an important lesson business owners like Deborah Sweeney have learned as sometimes it can be difficult to determine what could be written off as a deductible. “How do we categorize new furniture — do we write it off or depreciate it?” says Sweeney “What amount of an owner’s health care costs is deductible?”.
Today there are many software that do the bookkeeping function for you but using them the right way couldn’t be any more important. The problem when it comes to using bookkeeping software entering the wrong information or placing anything in the wrong section could set you back a lesson Christina Divigard, owner of an ad agency has learned the hard way as her inexperience in using her accounting software has in errors that resulted in her having to spend two weeks get her books all in order. Putting the expenses your business incurs into the right category could take some practice but in the end it could save the time and cost that would come from trying to fix it and the more research you do the more you learn about important tax laws and revisions and the more prepared you will be for the tax seasons.