Now that the stress is (hopefully) over for taxpayers and business owners, it’s easy to put any tax-related thoughts away until next year. However, as many probably learned the hard way, the more organized you or your business keep financial records, the smoother next year’s season will go, and now is the perfect time to begin the organization process. An article in Business Monthly gives suggestions to small business owners so that they can start preparing for tax season.
Whether filling taxes on paper, or outsourcing to a 1099 processing service, the earlier you set up a system, the better. By keeping all invoices, receipts, bills, expenses and W-2 and 1099 forms in an accessible and secure place, small businesses can ensure that all 2013 information well be intact. The IRS provides a list of all documents small businesses and self-employers should keep in order to start preparing for tax season.
Additionally, know and understand your deductions and tax credits now. This way, you and your business can keep better track of what they need in order to qualify later. This is especially true this year, since the Affordable Care Act will be adding a number of different provisions that will help small businesses. Even so, since tax deductions change each year, staying up to date to how your company can use these credits will help you know how to stay organized.
In the same light, make sure you know if your employees are either contracted or full-time.
“Independent contractors and employees are not the same, and it’s important to understand the difference,” the article wrote. “To the IRS, misclassification can be seen as an attempt to avoid payroll taxes, and non-compliance can bring penalties and back taxes.”
This also goes for keeping personal and businesses expenses separate. This can be difficult for small businesses, one of the reasons the IRS looks closely into these files. In case of an audit, keep these financial records clearly separated.
Tab Service Company is a Chicago based company with over 53 years of experience as a data processing service provider. We provide business with outsourcing solutions for 1099 processing services, document scanning services, data entry services and mailing/lettershop services. As a SOC2-approved service organization, we apply industry-best practices to our approach with clients.