As any small business owner knows, this time of year can be busy for several reasons.
Not only are you starting off a new year with lots of new plans and initiatives, but you are also putting the previous year behind you, especially as it relates to taxes.
While most companies have already gotten their taxes compiled for both full-time employees (W2s) and contractors (W9s), others are going to work their way up to the general deadline of getting all that information together for employees (Jan. 31).
Whether your business is on top of its tax obligations or dragging its feet a tad, here are some things to keep in mind before you finalize all the paperwork:
* Do I need help? – In many instances, small business owners only employ a handful of people, so doing the taxes in-house is not such a major task. For those, however, who employ dozens and dozens of workers, it is probably best to outsource the tax preparations to an expert, unless of course you have someone in your employ who has an accounting and tax preparation background. The biggest thing you want to avoid is errors, as being audited and potentially being saddled with penalties could be a major blow for your small business;
* Be organized – It goes without saying that organization is critical to properly compiling and filing your small business taxes. If you haven’t already, make sure you have all pertinent paperwork organized, including receipts/logs for items that you plan to deduct as business expenses, i.e. mileage, equipment purchases for the office, details from meeting with clients etc. Too often, employers wait until the 25th hour to try and find much of these items, leaving them scrambling;
* Know the pertinent dates – While the majority of small business owners who have been around for awhile now know important deadline dates, newer owners may not. If you have yet to or are still compiling tax paperwork for your employees, time is of the essence. The IRS mandates that payroll tax returns for fourth quarter and the annual Form 940 are due by Jan. 31, 2013. W2s must be postmarked and in the mail by Jan. 31 in order to be in compliance. In doing this, make sure you have current addresses for each employee, as some may have left your company during 2012 and also moved. Form W3 and copies of the W2s are required to be mailed to the government by Feb. 28. Forms 1099 must also be in the mail by Jan. 31, however, don’t send the government copies until the Feb. 28 due date. The reason for this is to deal with any errors on paperwork provided to independent contractors. Once again, make sure the amount of money paid to freelancers during the 2012 tax year is correct, along with verifying their mailing address;
* Close them up – In order to keep your small business running on time when it comes to the financial books, review all bank and credit card accounts, making sure that all transactions were properly posted during the last 12 months. If there are any discrepancies, work to solve them immediately. If this past year found you a tad unorganized with such responsibilities, make the next 12 months a different story, preventing you from scrambling next year at this time;
* Know your deductions – Finally, make sure you declare all allowable deductions for your small business, putting you in the best financial position for this most recent tax year. Keep in mind that you can declare items such as mileage to and from to meet with clients, equipment purchases for the office such as computers, supplies and more, expenses for state filing and legal fees to form a corporate entity, business advertising, and if you started an employee retirement plan in the last year (businesses with 100 or fewer workers).
With April 15 not too far away, will you make the 2012 tax year more or less taxing for you and your small business?
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