Tax Preparation Tips for Small Businesses

The year’s end signals tax time for small business owners. Some entrepreneurs approach the season with trepidation, but you can look forward to it with confidence as long as you have sufficiently planned ahead of time. Here are some tax preparation tips to help ease your apprehension of this time of year.

Organize Your Materials

Efficient tax preparation begins with good organization. Keeping careful track of your invoices and expense receipts throughout the year makes it easier to call up data you need at tax time. Let cutting edge accounting software help you with this task. Instead of tossing paper into filing cabinets, scan relevant documents into digital format for easy storage. Another important bookkeeping item you should take care of on an ongoing basis is bank reconciliation, or ensuring that daily bank transactions match entries in your accounting systems.

Collect W9 Forms

If your business makes use of independent contractors as part of your labor pool, you need to send out 1099 tax forms that report specific income to each worker that earns over $600. However, before your accountant can do that, you need to collect their IRS W9 forms, which are requests for taxpayer identification numbers and certifications on which contractors list relevant tax information. Most businesses ask for W9s at the initiation of working relationships, but if you haven’t done this, make sure you collect them well ahead of tax season.

Go Over Your Quarterly Payments

Most small businesses make quarterly estimated tax payments. Before the end of the year, analyze these payments in relation to your year’s income. Double-check that your last payment of the year, in early January, is as close to the estimated numbers as possible.

Schedule Time With Your Accountant

Accountants are notoriously busy during tax season, especially the type of high-quality accountant that you should be hiring. If you anticipate needing assistance with tax preparation, book time with your accountant well in advance to avoid the rush.

For more advice on tax preparation for small businesses, look to Flipside Capital.