The new year has begun. For most people that means a whole year to look forward to. As the owner of a business, you have something else to consider – the new tax season is starting up. Your company is involved in a tax system that is, for some reason, very complicated indeed. If you haven’t started preparing for it already, it is high time you considered your current bookkeeping methods, reviewed any changes you should make, and compare your practices with the requirements of the IRS. These tips will help you prepare your taxes and be ready to go when the time comes.
Don’t Depend on the Government
Many of you may be thinking that the new administration will work to implement new policy that ease pressure on small to mid-sized businesses will come through. However, it’s best to not wait around for this to happen; you waste precious time while you wait. Preparing for the new year and the new tax season means working with the tax structure you are used to right now. Be ready to file with the structure that is already in place. If it changes before the tax season comes, all the better for you.
Watch Out for Higher Minimum Wages
On the 1st of January, minimum wage was raised to $10 per hour. If you employ many workers at minimum wage, you may have to change your bottom line to match the increased spending. Talk to your accountant or bookkeeping specialist to better understand how to soften the blow this will have on your finances. It may be necessary to change your budget to make up the difference. You may even have to bring your short-term goals for the year back a little to compensate for the change.
Keep Track of Your Sick Leave
This year, new paid sick leave laws have been added. If your company has up to fourteen people, you need to offer them one full day (24 hours) of paid sick leave at least. If you have more than fifteen employees, they are required to have more than 40 hours of paid sick leave. Adjust your bookkeeping system to keep track of these wages as well as the usage of the sick time by your employees. You want the numbers to be as accurate as possible to ensure better taxes being filed. Try working with bookkeeping consultants to better your chances of doing this.
Make All Your Receipts Go to Storage
Keeping track of all your receipts is incredibly important. This is one of the best ways to get deductions during the upcoming tax season. If you don’t keep your receipts, getting audited is a real possibility. If you own a small business, you won’t have many receipts. Have a single box that is filled with the receipts, organized in any way you please. It might be a better idea to switch to electronic bookkeeping when doing your taxes. You can take pictures of the receipts and add them to your expenses.
Watch for Changes in the Affordable Care Act
While the Trump administration has promised changes in the ACA, you should expect the current laws to continue to apply to you until they don’t. If you haven’t filed already, know that you should have submitted your 1095 health forms by the last day of January. 1094B and 1095A, 1095B and 1095C are due on the 31st of March if you are submitting the forms via electronic media.
Buy All New Equipment ASAP
Are you looking for ways to reduce your tax bill from last year? Any purchases you make of equipment at a value less than $500,000 can be deducted in lump if you put the equipment to work in the same year. Right now, you’re probably using depreciation to get smaller deductions in the long term. If you buy all your equipment right now and put it into service, you can claim deductions for the full cost of them all this year.
Keep Track of all Due Dates
This tax season, expect some changes to the due dates for certain forms. For example, if you are a c-corporation, you don’t have to file until the 15th of April, a whole month later than usual. If you’re an s-corporation or a partnership, you need to file on the 15th of March, which is a whole month earlier than you would usually have to. If you miss your deadline, you need to file for an extension with the IRS. Even if takes you longer to file the right forms, you are required to pay any taxes you think you might owe to the IRS, on April 15th.
With a new administration, and new tax laws, there is a lot know before filing your taxes this year. Without any changes, tax code can be very complicated, make sure you talk with your accountant or a tax professional. Practice these bookkeeping tips this year to stay ahead of your taxes.