How to Reduce Your Stress For Upcoming Tax Seasons
Tax season does not only stress accounting professionals, but business owners find themselves alarmed during the tax season as well. Accounting professionals are efficient when their clients (individuals and businesses) are time and work efficient on their end as well.
Businesses find themselves penalized from the IRS after tax season for several reasons. A few of the reasons to be penalized could be omitting to issue 1099s, W-2, or not filing the business tax returns on time due to unclosed or unclean books, but the list goes on.
Some business owners do not connect or record all transactions from the business banks or credit cards, only to realize that the business is missing quite a few transactions by the closing period. As soon as the business is approved for a new credit card, the owner or the person responsible for accounting should include the new card in the book database for accuracy of their books.
As businesses incur daily expenses, many have repeated vendors, suppliers and one-time vendors that cost them more than $600 for the entire year. Those suppliers are entitled to receive a 1099 by the end of January. It is cautious for business owners to request W-9 from US suppliers before the disbursement of the first payment.
Issuing the payroll documents on time is vital because the failure to do it could result in penalties on the business owner’s side. It is the client’s (business’ responsibility) to file and mail the employees’ form commonly known as the W-2 by January 31st of the following year. For example, in tax year 2019, the deadline to send employees their W2 would be January 31, 2020.
Closing the books by the end of each month is the best solution to maintain clean books and accurate financials until the end of the year, before filing for the business tax return. Making monthly adjustments and adding the last adjustments at year-end can save the client time and money when it comes to having clean books.