2013-12-17 05:05:52 Taxes English When tax season is around the corner, getting your finances in order can help you avoid problems at tax time. Here are tips for business... https://quickbooks.intuit.com/r/us_qrc/uploads/2014/07/iStock_000005240670XSmall-300x199.jpg https://quickbooks.intuit.com/r/taxes/preparing-year-end-finances-for-seamless-tax-filing/ Tips on Year-End Finances & Business Tax Filing | QuickBooks

Preparing for Taxes

Preparing Year-End Finances for Seamless Tax Filing

Tax season is right around the corner. Getting your financial house in order now can help you avoid problems later. Here are some tax prep tips and key documents to gather as the calendar year draws to a close.

Income Records — If you worked for an employer before becoming an entrepreneur, you know that reporting your income as a small-business owner is trickier than it was when you simply waited for a W-2 to arrive in the mail. Minimize your tax-season headaches by organizing your bank deposits and statements, receipt books, invoices, and credit card processing data from the past year, along with any 1099-MISC forms you receive from clients.

W-9s and Employee Withholdings — Did you hire any independent contractors or work with subcontractors whom you paid more than $600 in 2017? If so, confirm that you have a completed and signed Form W-9 on file for each one; you’ll need to send them a 1099-MISC by Jan 31, 2018. Did you have employees on your payroll? Pull together your records of all local, state and/or federal taxes and Social Security you paid on their behalf (and withheld from their paychecks). “You should have these records on file if you do your own payroll. If you use a payroll service, they will have copies of them,” says Manny Skevofilax of Portal CFO Consulting.

Receipts for General Business Expenses — If you plan to deduct, or “write off,” expenses related to your business, you’ll need evidence to support each claim. Round up your mileage log and/or original transaction receipts for advertising and marketing and business travel, meals, entertainment, gifts, and the like. Skevofilax urges small-business owners to begin this time-consuming information-gathering process well before tax time — especially if you don’t use an automated accounting system to track your business expenses.

Receipts for Home-Office Expenses — If you’ll claim a home-office deduction, gather receipts and canceled checks that support direct and indirect expenses, from utility bills to property insurance. If you have insufficient documentation to support a home office claim, new home-office rules allow you to claim $5 per square foot of the space used for business — up to 300 square feet — in 2017.

Asset Documentation — If you entered into any kind of equipment or property lease in 2017 — whether for an office copy machine or a business vehicle — make sure you have the paperwork on hand for tax prep. To support any claims of depreciation for assets you own, you’ll also need a purchase record (invoices, real estate closing statements, canceled checks) that includes when, how, and for what amount and purpose an item was purchased. If you no longer possess assets you previously claimed, note either how much you sold them for or how you disposed of them.

Annual Report Filing (If Required) — If you run a limited liability corporation, you may be required to file an annual report of sorts. It’s not an IRS report, so requirements vary by state (business owners in Delaware, Ohio, and South Carolina are exempt), and you’ll want to double-check the Statement of Information filing laws in your area. The process may simply require that you complete a one-page form verifying owner contact information and place of business; however, failing to miss the filing due date, which also varies by state, may result in penalties and fees. In some states (like California) not filing this information is taken as seriously as failing to file taxes at all, and can result in revocation of your legal right to conduct business in the state.

Estimated-Tax Payments — At this point, most small-business owners will have made three quarterly estimated tax payments for 2017. After you gather all of your income- and expense-related documents, verify that you’ve paid enough estimated taxes for 2017. If you haven’t, increase the payment that’s due Jan. 16, 2018, advises Nellie Akalp, CEO of the small-business advisory firm CorpNet.com, in order to reduce the amount you owe on April 15, as well as any penalties for underpayment.

Chapter 6.
Cash-Only Business? Here’s How to Avoid an Audit 2 min read
Rate This Article

This article currently has 13 ratings with an average of 2.5 stars

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.