Taxes aren’t like building a bar in your rec room.
You mess up on some measurements and the worst thing that happens is you end up with a rec room floor full of liquor. Mess up on your taxes and the worst thing that can happen is, well, ask Wesley Snipes.
So getting it right might be one of the most important business moves you make this year. And even if you’ve got an accountant, he or she is going to need things from you to make sure everything is done correctly. Here are eight things you need to be doing right now so your taxes are squared away by April.
Trying to figure out numbers from last year is going to be slightly difficult if you don’t have all of them done. So, if there are outstanding accounts payable and receivable, either get them settled or account for that income/expense in 2015 instead. It may take some creative maneuvering, but it beats scrambling to close everything out on April 14.
If your idea of planning ahead is a series of sporadically placed post-it notes on your desk, here’s a calendar to help. We don’t write this for our health, you know. If you don’t like our schedule, we won’t be insulted, but make sure you make one of your own now to avoid last-minute chaos.
Employees are full or part-time staffers for whom you pay payroll tax and filled out a W-4 when you brought them on. Contractors are people who filled out an I-9 and who you do not deduct tax from. Send employees their W2s and contractors 1099s as soon in the year as possible so they can figure out their taxes and you can figure out yours.
You already know the standard business deductions of travel, rent, utilities and other costs of doing business. This is the time to get those receipts together (because you kept them all, RIGHT?) But there are other deductions you can take like startup expenses up to $5,000, defined by the IRS here as well as half of client entertaining expenses, and outstanding money due to you on products (but not services).
The Affordable Care Act has brought a whole slew of changes to how you’re going to do your taxes. Here is a good place to start when trying to figure that one out. But other business tax code changes such as updates your state may have made in corporate taxes, payroll taxes and income taxes are important to figure out. Rarely will your reporting be the same year after year.
There’s a reason “doing your taxes” is right up there with “invasive dental surgery” and “time in a Turkish prison” as punchlines for things nobody ever wants to do. And, if you’ve gotten this far in the article, your blood pressure has probably already shot up 15 points just thinking about everything you need to do this month. So hire someone. This is something you can’t afford to get wrong, and if you don’t have time to do it right hire someone who does.
Kind of like how the $2000 you won at the track can be tax deductible if it came after losing $3000, if your business spend more than you made this year (aka you lost money) those losses can be carried back as far as two years to offset profits and get potential refunds. Similarly, you can take excessive losses as deductions for up to 20 years.
In taxes, just like in business and in life, you must always learn from your mistakes. All those times while prepping taxes when you say “I wish I’d done that,” make sure you do it in 2015. Making a schedule is step one, but take some time to plan out how you’ll make this a less-unpleasant task next year, and maybe you will have some time for DIY carpentry.