By Paul Ursich
So you and your company survived another tax deadline. Congratulations. Now, while the memory is still fresh, is the ideal time to conduct a post-mortem of your current process to identify shortcomings and strategies that will help you boost efficiency and accuracy next year. Here are a few suggestions you can use to kick-start your new processes.
Review withholding allowances
Large tax refunds seem like a good thing when you get them, but it means the government has been using your funds interest-free for a year or longer. The alternative is owing significant tax balances along with possible interest and penalties, which requires you to immediately write a hefty check for the shortfall. Both scenarios are signs that you either need to adjust your withholding allowances for W2 income or recalculate your estimated quarterly payments for business taxes in order to be as accurate as possible.
Use technology to your benefit
My neighbor started his business in 2015, and said he spent copious time and effort to manually entering his credit card and bank transaction data in QuickBooks Online. He was thrilled at my recommendation that he contact his bank and ask if it could connect to his software for automatic uploads of banking data, as many banks can. The point is, new technology comes along all the time that can make our lives easier and more productive – and that’s as true of tax preparation as any other aspect of operating your business. Stay current and take advantage of new technologies that add value.
Prepare for 1099 reporting — now
As part of your vendor setup process, make it a practice to get a completed W9 form as soon as you initiate a working relationship. Do it now and it’s one end-of-tax-year hassle you won’t have.
Know your nexuses
Nexus is a legal term referring to requirements for companies doing business in a state to collect and pay that state’s sales and employment-related taxes. These laws are different in every state, which means your company could be impacted in different ways if you have people working in multiple states – even remotely – or traveling and working in another state for extended periods. It can also affect the taxation status of product and even service sales outside of your corporate location. Plan now to avoid confusion.
Finally, don’t wait to have these conversations with your accountant and tax consultants until the first quarter next year. Initiate them now. Not only will it be easier to schedule time now that tax season is over, but it will give you a full year to prepare at your own speed.
As director of CFO Advisory Services at Wiss & Company LLP, Paul Ursichreviews clients’ accounting processes and procedures to help increase overall efficiency. Reach Paul at firstname.lastname@example.org or (973) 994-9400.