"When a small business owner plans for tax season strategically and consistently throughout the year, they can create a much better financial outcome for their company," Jamal Ayyad, vice president of service delivery for SurePayroll, said in a statement.
Whether you're preparing to file your 2016 tax return or you just want to plan smart for the current year, here are six "checkups" you can do to make sure you're always on top of your taxes.
1. Ensure that ownership records and hiring/employment practices are up-to-dateIn order to guarantee that your business is complying with guidelines that are constantly changing, plan regular reviews of documents and applicable rules, said Scott Augustine, a shareholder with Chamberlain Hrdlicka law firm.
Small businesses that are having trouble paying their payroll taxes may be able to take advantage of an IRS installment plan, Ayyad said. If you owe less than $25,000 in combined tax, penalties and interest, and filed all required returns, you may be eligible. Visit the IRS website for more details.
2. Calculate your projected payroll taxes
The Affordable Care Act, the IRS and the U.S. Department of Labor have rules regarding independent contractors or 1099 employees. Make sure your firm or organization operations are in compliance to avoid costly penalties and fees, Augustine said.
3. Do a compliance checkup
4. Keep up with your home state's tax issuesSome states take loans from the federal government to meet unemployment benefits liabilities. Ayyad noted that if your state has taken, but not repaid those loans, there will be a reduction in the credit against the Federal Unemployment Tax Act tax rate. This means employers in those states will have to pay more. A number of states may be affected, including Arizona, Arkansas, California, Connecticut, Delaware, Indiana, Kentucky, New York, North Carolina, Ohio, Rhode Island and South Carolina, as well as the U.S. Virgin Islands.
5. Review non-competes and confidentiality agreementsThis is especially important for those that have been written by attorneys outside your state of operation to avoid possible theft of important assets, Augustine said. As part of this, he also advised reassessing document-retention policies to make sure they balance exposure with business needs. This will help you avoid issues in tax matter and litigation, he said.
6. Think about succession planningWhat would happen to your business if you had an unexpected health crisis or accident? Augustine said business owners should be discussing and determining what actions may need to be taken to ensure the firm continues on. There are also tax benefits to succession planning, so discuss with both your attorney and your accountant, he added.
Organizing tax records now can make filing taxes much easier and faster later on, Ayyad said.
"When small business owners get their information together well ahead of time, they greatly improve the odds of filing a complete and accurate return," he said. "Being compliant is the law, but instead of merely checking taxes off of a list of things to do at the end of the year, a savvy small business owner knows that preparation and planning ahead are key components of success."
Photo Credit: Shutterstock
Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.