According to the Entrepreneur article “Tips To Ease Small Business Tax Season Stress” by contributor Chris Rush, tax season can be very nerve-wracking for small business owners. Regardless of whether you do your taxes yourself or hire an accountant, preparing for them will help ease some of that stress. As such, Rush offers six tax season tips for small businesses:
- Check your finances. Make sure that your employee information is up to date. For instance, did anyone have a life-changing event (move, marriage, children, etc.)? What are their current filing and work statuses — exempt/non-exempt, active, terminated or on leave? Check their year-to-date wages, taxes and benefit contributions.
- Separate independent contractors from employees. Employees can be mistakenly filed as independent contractors. If you do work with independent contractors, double check their names, Taxpayer Identification Numbers, addresses, work locations and total earnings. Check all wages paid to employees and contractors (Forms W-2, W-3 and 1099) as well as any reimbursements made to them.
- Keep organized. By keeping your tax records and information in one, organized location, you not only make it easier on yourself, but you’ll have the information at hand if you happen to be audited. Remember to check your state and local tax guidelines to see if you must file certain non-federal taxes.
- Denote exemptions, deductions and rebates. Look at your employees’ earnings and deductions in your books. Bonuses are usually considered supplemental wages and subject to taxes, and you must adjust employee wage and tax amounts based on benefits and retirement plans.
- Stay updated over the long term. Turn the above tips into habits that reflect your long-term goals and plans. Stay organized, and consider including future leaders of the business in this tax preparation so they can familiarize themselves with it.
- Don’t be afraid to get help. With so many forms and regulations, tax preparation is not only daunting, but you can easily make mistakes. Don’t be afraid to ask for outside help. It is often easiest and best to go to a professional because at the risk of incurring penalties, it can be the cheaper option.
For more information on the specifics of tax season preparation as well as a list of tax forms your company must file, click here.