Business owners and entrepreneurs are not immune from the stress of tax season, in fact, it can be far more daunting than preparing personal filings. There are tax rules for filing returns specific to the type of business model and businesses need to be prepared for audits in different departments. Some home based companies will not have corporate expenditures such as employee obligations including pension and insurance and have to look at business taxes from a different angle. Decision makers have certain items they must watch for in their company books this next tax season. This can include any new rules and guidelines for various expenses, tax rates, deductions, and credits. Below is a closer look at each of these categories and how to keep your company books in the clear.
New Rules and Guidelines
Each tax season rules expire as new ones are implemented. Staying abreast of these, as well as other guidelines that accompany them requires pre-planning and research. To assist with this, the IRS takes steps to publish this information in advance of the tax season on their website. Most businesses generally outsource their tax responsibility to reputable accounting firms or CPAs in the case of smaller entities. This practice ensures a forward-thinking position, and their ability to meet potential audits that may occur.
Expenses
Most expenses for businesses depreciate based on the type of asset. For example, resources used in the course of day to day operations including property owned printers, office equipment, and copy machines would qualify as a fixed asset. Keeping detailed records for purchases of these resources is critical to report the appropriate amounts. Grant tax expenditures can also be tricky because of the additional stipulations with reporting to grant makers. In this case, user-friendly software programs such as IT Works takes the guess work out by seamlessly organizing your grant data into a grant account software.
Tax Rates, Deductions, and Credits
This is considered the bread and butter in tax season as it determines the amount of payment each business incurs. There are adjustments to the list each year, because some have a specific lifespan. Scrutinize the obligations to employees as they have a direct impact on the amount allowed for deductions and credits. Grants and other donations to IRS sanctioned non-profits also fall under this category, so maintaining a fiscally sound policy is crucial. Tax rates are moving targets requiring foresight to calculate the correct estimate for quarterly payments. If the figures are off, the year-end return can lead to penalties.
These are the most important markers to watch for in the company books this next tax season. To be prepared, implement steps such as daily reconciliation of all transactions. Instituting self-audits at various timeframes throughout the year will also go a long way in being ready for preparing your taxes as well.
