Housekeeping to Prep for Year End
We have reached the halfway point! With only half a year left before year end and tax season, we wanted to share with you our housekeeping list to best prepare your business.
Firstly, be sure to login to your client portal regularly! All of your information, documents, and communication with your designated accountant are featured in your portal. This is the best resource to stay in the know about your books.
You will need to upload any and all necessary documents to your client portal. The list of important documents can be found in your portal. This includes documents such as new loan statements and bank statements. These will need to be attached in your portal so that your designated accountant has all the information necessary to ensure the balances on your reports are correct.
Be sure to update all your fixed assets. Did you buy any new equipment or vehicles? Or did you sell/dispose of any equipment and vehicles? This needs to be recorded and updated.
You will also need to upload all W-9’s required for employees and subcontractors. There will be a request for those that are needed in your portal. All you have to do is navigate to the request in your portal and upload the documents. If you are unsure how to do so, or if a document is required, please reach out to your accountant.
To help prepare for filing taxes, review your Balance sheet and Profit and Loss reports. If significant change in your net income (profit/loss) could cause a significant impact to your tax liability. A quick phone call with your dedicated accountant will help you determine what changes need to be made.
Please be sure to answer any and all questions in your client portal. These answers will help ensure accuracy when creating your financials and wrapping up end of year reports. If you have any questions you can submit those in your portal, give us a call, or email your dedicated accountant.
FAQ’S
Q: What documents should I keep track of?
A: Receipts, bank statements, loan documents are all things to keep and file away for safekeeping. In the event that you are ever audited these documents will be important.
Q:Can I lower my tax liability?
A: Your CPA can recommend several strategies to help reduce your tax liability. Some options may include donating to charities, increasing retirement contributions, and taking advantage of tax credits.
Q:Is this business structure right for me?
A: Depending on your payroll and business needs, you may benefit from changing your company from an LLC to SCORP and vice versa. The largest difference between the two being how they are taxed as earnings will pass through the business to the owner rather than being taxed on a corporate level. The larger your distribution, the less employment tax you'll pay.
Q: How much can my business make before having to pay taxes?
A: This will differ depending on a business entity. Corporations use form 1120 to help determine how much will be owed in taxes. Other entities like Scorps, LLC’s and partnerships, require their owners to report income on their personal returns. Meaning they will have both business and non business income listed on their return. For independent contractors, once they earn $400 or more they will have to pay taxes.
Q: What expenses can I claim on my taxes?
A: To claim the expense on your taxes it must be what the IRS deems both “ordinary”, and “necessary”. Ordinary expenses are those that similar businesses commonly pay for. Necessary expenses are one that you must make in order to conduct business. These expenses can include but are not limited to
Advertising
Accounting and legal fees
Automobile expenses
Meals and entertainment
Home office expenses
Transportation and travel expenses
Dues and Subscriptions
Contract Labor
Office costs and supplies
Professional fees
Rent and utilities for office spaces
Q: What companies have to pay quarterly taxes?
A: Corporations, people without enough withheld tax, and those who are self employed.
For corporations, if they expect to owe at least $500 they may need to pay quarterly taxes.
If you need more taxes withheld, you should make quarterly tax payments. You must meet two requirements to pay quarterly taxes. You must owe $1,000 in federal taxes minimum after credits and withholdings. The second requirement is that your refundable credits and withholding must be less than 90% of your current tax liability and 100% of last years. As well as 110% for those with adjusted gross incomes of $150,000 for those filing jointly.
Taxpayers who are self-employed should pay quarterly if they owe $1,000 or more in taxes.
Q: What is the easiest way to pay estimated taxes?
A: Use the Electronic Federal Tax Payment System. Businesses can use this to make weekly, bi weekly, or monthly payments payments. Or have us pay those for you through our payroll processing system.