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Six ways to sail through tax season

November 02, 2014

  • Tener algunos procedimientos listos para ayudarlo a organizarse pueden hacer una gran diferencia en la reducción del tiempo requerido para la preparación de su declaración de impuestos.
    Having some procedures in place to help organize yourself can make a big difference in reducing the time required for tax preparation.

Tax season will be here before you know it. While few people look forward to their annual date with the IRS, having some procedures in place to help organize yourself can make a big difference in reducing the time required for tax preparation. Here are a few things that you can do now to make tax time more pleasant.

1. Make sure you have a business account. If you don’t have a business account, consider opening one. A business bank account, separate from any personal activity, allows you to track business transactions very easily. At tax time, I see many business owners who cannot find receipts or remember how they paid for expenses. A centralized statement, along with keeping receipts and reconciling the account each month, can help an accountant to maximize your deductions since you’ll have the proper supporting documentation available.

2. Maintain your books at least monthly. Don’t wait until a few days before your tax deadline to do your books. Reconcile and update your books on a monthly basis and you will have year-round control over the financial status of your business. Otherwise, you may be so busy throughout the year that at the end of the year you may not remember some transactions that could improve your tax situation. Keeping orderly, monthly books will also eliminate last-minute headaches for you and help your accountant maximize tax benefits for your business.

3. Use software that works for you. If you are confused or doubtful that your accounting software is working for you, get training or use a simpler system. I have worked with owners who have incorrectly entered information into the accounting software, which has generated erroneous financial reports, and more time and money spent in trying to fix their errors.

4. Collect W-9s for contractors at hiring time. When you use individuals or self-employed persons to provide services for your business, you may have to file a 1099-MISC to comply with IRS regulations. If you must issue a 1099-MISC, you will need the contractor’s W-9 form. The easiest way to get this done is to have all contractors complete W-9s at hiring time, not when you are against the clock to file the form in January. At that point, you may have trouble tracking down the vendor for the information, especially in cases when the vendor is no longer in business or is otherwise unavailable. 5. Clarify what is an asset, and what is an expense. Separating expenses from assets can be a challenge for business owners. For example, a computer purchased for business purposes is an asset and not an office expense. If you’re confused, just ask, “How long will it last?” If the answer is over a year, it’s most likely an asset. If your answer is “less than a year”, it is an expense. When purchasing an asset, keep the receipt and record the purchase date and cost. Otherwise, you will have to rummage for the information later so your accountant can report it correctly on your tax return.

6. Be aware of your responsibilities under the affordable care act. Do you employ at least 100 full-time equivalent employees? Beginning January 1, 2015, applicable employers must offer affordable healthcare coverage to their full-time employees and their dependents or they may incur an employer-shared responsibility payment. On the other hand, smaller Employers that are not subject to the Affordable Care Act are entitled to a small business health care tax credit if they voluntarily offer health insurance to their employees though the SHOP marketplace. This applies when a business has the equivalent of 25 or fewer full-time employees, the average annual wages of full-time employees is less than $51,000 and the employer pays over 50% the insurance premium.

• Maria Ramos is President and managing partner at Ramos Tax and Services Inc., a full-service, family-owned, and operated tax accounting firm that has served the community for nearly 15 years.

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