During the height of the tax season, the payroll experts at Padgett Business Services® feel that it is important for small business owners to understand and follow this small business rule: Seek payroll and tax advisement throughout the fiscal year— not just at tax preparation time.
Your small business has many parts and components that keep it running like a well-oiled machine. First – you have your business mission: the main reason why you exist. Second – you have the individuals in designated roles to further your business mission to meet the need of current and prospective clients. Third – you have the financial gears operating in the background to ensure that your receivables are appropriated to your payables in the most efficient way possible.
However, you could be one of several other small business owners who believe that they are adequately prepared for the April 15 deadline for federal tax preparation just to be upset by costly tax or compliance penalties, high interest rates or misappropriated funds or classifications. Many people suffer the sticker shock and disappointment that settles in upon discovering an independent contractor was misclassified, or that a business expense meant to be a tax write off did not count as an appropriate business expense. Your small business at this point may be in trouble, as it has to meet certain federal requirements in order to be productive and successful in the following fiscal year.
How to prevent negative surprises after taxes as a small business owner:
- Schedule regular meetings with your tax adviser and payroll manager. Your tax adviser can help provide insight on necessary requirements to meet any tax breaks, as well as potential tax penalties regarding healthcare mandates or other small business payroll-related matters.
If you do not have a payroll manager, consider consulting with an outsourced payroll service company. They can evaluate how you are managing your payroll from an objective point of view and lend their expertise to appropriate classification and application of payroll taxes, payroll deductions and other payroll services.
- Process all account receivable and account payable invoices as quickly as possible to avoid any missing information or gaps in your business finances.
- Keep track of all pertinent employee data. These include the following:
- Employee hire date (and leave date if applicable)
- Employee paystub details (social security tax, Medicare tax, federal and state tax, health benefits, 401k, vacation time and other classifications to your payroll)
- Classify any contracted employees as independent contractors with the adequate forms (w-2 and 1099-MISC) – misappropriating these employees as non-contracted employees (part-time or full-time) will be a costly mistake during tax preparation
There are many other nuances that small business owners have to work through as they learn how to comply with regulations regarding small business payroll and taxes. To avoid any further confusion, many outsource their payroll management to trusted payroll service organizations and hire a tax adviser to oversee all the business expenditures to ensure they are compliant with business taxes come tax season.
Padgett Business Services® offers small business owners relief through proven payroll services. We have worked with a wide variety of businesses, and our payroll processing specialists will work alongside you to ensure your business functions without any hiccups. Learn more about our options available to small businesses here!
Do you have the support you need to manage your small business bookkeeping?
Contact us to schedule an appointment to speak with a local small business advisor.