There are a few areas that all small business owners will have to pay attention to on a regular basis, and one of these is staying tax compliant. There are a few requirements that must be met to remain compliant with the IRS — for some business owners, this can become a major burden along with all the other responsibilities they carry.
At Singular Bookkeeping, we’re here to help. Our small business accounting services include several areas of tax filing and compliance, and we’ve assisted countless small business owners with remaining in compliance and avoiding penalties or other issues. In this two-part blog series, we’ll go over some simple recommendations we often make to clients on how to stay tax compliant without much major effort.
Up-to-Date, Accurate Bookkeeping
First and foremost, the foundation of your tax filings (and several other financial areas) is your bookkeeping system. If you’re using an old shoebox or random folders on your computer to store receipts and other business records, it’s time to make the switch.
While this may seem like a small detail, there are many benefits associated with having accurate up-to-date bookkeeping information, including being able to produce reports quickly for tax time, being able to identify potential problems early, and staying organized.
All of this information is necessary for compliance with the IRS — if you have incorrect or incomplete information regarding your financial records, it’s likely that your tax filings will be incorrect as well.
Don’t Forget Self-Employment Tax
As a general rule of thumb, self-employment taxes are required for anyone who made $400 or more in net earnings from self-employment, which includes all small business owners. Net earnings from self-employment are defined as the total amount of income you made after deducting specific expenses and business deductions, but before taking any deductions for things like taxes or unemployment insurance.
If your gross earnings from self-employment were over $400 in a year, you should have been sent a form 1040, which includes Schedule C for self-employment. Self-employed individuals will pay 15.3% of income (12.4% for Social Security, 2.9% for Medicare) on a quarterly basis.
If you’re unsure about any part of your requirements here, this is one major area where tax professionals like those at Singular Bookkeeping can be helpful.
Check for Errors, Omissions, or Unreported Income
It’s not uncommon for small business owners to make mistakes on their tax filings, whether they’re self-employed individuals or corporations. Before you submit any documents to the IRS (or your state’s department of revenue), it is extremely important to review your records and make sure everything is accurate.
While it might take a little longer, we always advise our clients to provide us with as much information as possible about their financial records and tax compliance items like the ones above. This increases the likelihood of any potential problems being caught and corrected before submission.
For more on how to stay tax compliant as a small business owner, or to learn about any of our bookkeeping and accounting services for small business owners, speak to the team at Singular Bookkeeping today.