Tax season may seem daunting, but starting early will help alleviate last minute headaches. Follow these tips now for a smoother tax season.
It may seem like a long way off, but Tax Day 2017 will be here before we know it. For business owners, tax season can be a stressful time full of paperwork, confusing regulations and deadlines. Luckily, there are certain steps small businesses can take to start getting organized ahead of time, which will ultimately help smooth the process and alleviate some of the related stress. Read on for three important things that business owners should be doing now to ensure tax season goes by without a hitch.
Get the financial house in order
There’s no better time than the present to start preparing the information needed for tax season. In early 2017 businesses should focus on reviewing their financials, including their profit and loss statement and balance sheet, as well as doing account analysis and preparing any necessary account reconciliations. Taking these steps now will enable business owners to get ahead of the game as well as create a list of questions to cover with their accountant or tax preparer to ensure their understanding of their financial information. While it can seem like a daunting undertaking, starting early gives business owners the time to break this prep work down into more manageable daily tasks. Putting in the leg work now will not only help ensure a smoother tax season, it will also help owners better understand the financial health of their organizations and prepare for any tax consequences well in advance of the tax filing due dates.
Know the required forms and deadlines
When preparing for tax season, it’s important to be aware of any changes in tax form requirements or reporting deadlines. One change that will affect small businesses this year is the new reporting deadline for 1099/1096 forms. Previously, companies were responsible for submitting their 1099/1096 forms to tax authorities by February 28th, but this year the deadline has moved up to January 31st, consistent with the due date for 1099 forms to recipients. Timely 1099 submission is an area that’s often overlooked by a small business, but it demands attention as failure to comply carries the risk of fines and penalties, not to mention the repercussions of having a team of unhappy contractors. Don’t wait to figure out the details and requirements of 1099/1096 tax forms – get them sorted out now to save headaches later.
Understand changes in the broader tax landscape
Often, small businesses focus on federal business tax requirements and results and fail to give sufficient consideration to other tax requirements. However, when preparing for taxes, it’s important to ensure the company is knowledgeable about state and local taxes as well, and is up to date with any recent changes in state and local tax law. Use this time to talk with tax preparers about changes in the broader tax landscape, beyond what’s important from a federal tax perspective. Businesses should be proactive in understanding how state and local taxes impact them – this includes changes that affect both the 2016 income tax returns they’re getting ready to file and their responsibilities going forward in the new year.
Finally, know the deadlines! This year’s deadline for personal tax filing is April 18th, 2017. However, dates vary for businesses, so check with a tax expert to be 100% certain.
Preparing for tax season is rarely a favorite task, but a little organization, planning and leg work can go a long way in alleviating tax season anxiety for business owners across the board.
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