It’s 29 Days until April 15- Do you Know Who is Doing your Taxes?
Most small businesses tend to try and do everything by themselves in the early stages. As they grow, they look to outsource activities such as bookkeeping, payroll, tax preparation and marketing. While this is understandable due to the lack of cash flow, it’s very important to either learn how to do these activities properly or hire someone who specializes in these areas to ensure you aren’t missing any potential deductions that could be saving you money. Also, it allows you to focus on your core strengths instead of wasting time in areas where you aren’t an expert.
2. What do small business owners often overlook when preparing taxes?The top 2 items that are overlooked with small businesses and taxes are making estimated quarterly payments and understanding how tax law differs from bookkeeping standards. For sole proprietors and single owner LLC’s, estimated quarterly payments are generally not made and this can lead to penalties and interest owed at the end of the year. In figuring your net income you may deduct meals with clients fully where as you can only deduct 50% of this in determining your taxable income. So you may end up owing more in taxes than you anticipated because you are looking at your business without regard to tax laws.
3. What is your number one tip this tax season?Stay organized! If you can maintain a level of organization monthly, you will spend less with your accountant as they won’t have to sort through boxes of receipts. Also, know the tax deadlines for your business entity type and give your accountant or yourself adequate time to analyze the information, resolve questions and still file on time. If you file for an extension, this only extends the time to file your taxes…not pay them! If you owe or think you might, make a payment on April 15th even if you won’t file until October 15th or know that you will be accruing penalties and interest from the IRS.
4. Any changes in 2011 that companies need to be made aware of as they start thinking about 2012?Thankfully, the Senate recently repealed the 1099 reporting requirement which was passed with the healthcare reform bill last year. The provision would have required a business to issue a 1099 to anyone or any business which it purchased more than $600 from during the year. This would have put a heavy burden specifically on small businesses to maintain strict records and issue official documents it may be unfamiliar with. In 2011, take advantage of the sec. 179 depreciation deduction on capital purchases which allows you to deduct the full cost of capital assets in one year rather than depreciating it over several years. It is important for small business owner’s to maintain some form of contact with ever changing tax laws that may impact them either through a relationship with a professional or by following twitter feeds of experts like the IRS or a professional blog, etc.
5. What should I look for in a bookkeeper? Tax preparer?It’s important to factor in several things when determining a bookkeeper to tax preparer that is right for you. They should have relevant experience or expertise with your situation. You want to find someone who has dealt with small business work in the past. Ask about the number and types of clients they currently service. They should have relevant qualifications. This includes but is not limited to education in accounting or tax fields and membership in professional organizations which require continuing education in their fields. For tax preparers, you should feel confident in a professional who is an Enrolled Agent or Certified Public Accountant as they have passed examinations and are required to take a certain amount of educational credits every year as well as being regulated for quality and competency by governing bodies. They should also be someone that you can build a relationship with. If you can’t get along, it will make for a difficult situation and add unnecessary stress. Seek out references from your colleagues and find out who they use, why they use them and see if it might be a good fit for you.
Meghan Ely is the owner of wedding marketing and wedding pr firm OFD Consulting. She is the exclusive wedding pr columnist to wedding marketing journal WedLock magazine and is a highly sought after speaker in the wedding industry. She loves ruffle table runners and Royal Wedding Tchotchkes. To learn how OFD Consulting can assist you with your wedding marketing and wedding pr, please contact us today.