7 Tax Tips for Small Businesses
by Mike D’Avolio
Keeping your tax records organized and being aware of the tax laws that apply to you can save you time and money. Here are 7 tips to help you focus now and get tax records organized for the future.
Image source: Photospin.com
Tax season is here. If you haven't already done so, you'll need to gather all the data you’ll need to file your tax return. And, that makes this an ideal time to put procedures in place for collecting and organizing your tax records, documents and QuickBooks files on an ongoing basis, so you can avoid the last minute scramble and potential fees when you file your return next year for 2014.
Here are tips you need to know to avoid compliance headaches and possible fines and penalties
- It may be tempting to classify an employee as a contractor to cut costs. Don’t. There are strict rules surrounding the proper classification of a worker and steep penalties for failure to apply the law properly. This infographic helps to distinguish between the two.
Related: Worker Classification: Employee or an Independent Contractor?
- There are convenient electronic services like Intuit’s 1099 E-file that pre-fill business info and enable you to email or print forms. For example, the 1099-MISC is required if you’ve paid $600 or more for vendors like, subcontractors, attorneys or accountants.
- You must file the Form W-2 Wage and Tax Statement to report employee wages, tips and other compensation to employees. Once the form is complete, send to the Social Security Administration (along with Form W-3) by March 31 if filing electronically.
- Travel costs? Home office purchases? These items, and much more, are considered deductions for the cost of running a business. Refer to IRS Publication 535 to learn more and find new ways to save.
- Due to the Affordable Care Act, tax credits are now available to small businesses that offer health insurance to employees. Some qualifications apply. Check this IRS guide for more information.
- There are a variety of retirement plans available to small businesses that allow both the employer and employee a tax-friendly way to save for retirement. For more information on these options, and how to capitalize on the government incentives, reference IRS Publication 560.
- There is a simplified calculation for determining the deduction for using your home for business use. In general, you will figure the deduction by multiplying the area of your home used for business by $5, up to a maximum deduction of $1,500.
Related: Understanding the Home Office Deduction
Mike D’Avolio is Senior Tax Analyst with Intuit’s Professional Tax Group. He has worked for Intuit since 1987, and has been a small business tax expert for more than 20 years. In this role, Mike serves as the primary liaison with the Internal Revenue Service for tax law interpretation matters, manages all technical tax information, and supports Tax Development and other groups (including customers) by providing them with current tax law developments, analysis of tax legislation and in-depth product testing. Mike is a CPA and holds a BS in Business Administration and JD from Boston University.