January 13, 2021
- You can eliminate a great deal of stress by beginning preparations in January, rather than waiting until Tax Day is just around the corner.
- Be aware of some slight reporting changes in 2021.
- Contact us at 973-276-0650 so we can start preparing your taxes today!
Our small business accounting experts help clients make tax preparations year-round.
Eliminate some of the stress that tax season brings by being proactive and taking care of these simple tasks this January:
- Obtain the appropriate forms. You’ll only get so far with your tax planning if you don’t have the forms your business needs. While the general filing process is similar for all types of businesses, different forms are needed for certain entities. For example, sole proprietorships use Form 1040, while partnerships must complete Form 1065 and Schedule K-1.
- Maintain and gather your income records. You will need to show the IRS, with proper documentation, how much income your business has brought in in the past fiscal year. Generally, you will need a record of gross receipts from sales of goods or services, refund documentation and income from any investments. Be sure to keep these records in a secure and accessible place so you don’t waste time looking for them at tax time.
- Document your business expenses. In any for-profit business, most business expenses are tax-deductible. However, the IRS will need to see the documentation of these expenses as well. Receipts usually serve as adequate documentation, but sometimes when it comes to larger expenses, a wider range of information is needed. This is a good time to have a tax professional help you obtain the proper documentation so you can minimize your burden as best you can.
- Be aware of changes for certain forms. Forms 1099, W-2, and 941 have undergone a few reporting changes that will take effect this tax season. Nonemployee compensation will now need to be reported using Form 1099-NEC rather than the standard independent contractor form. Additionally, your employees may have chosen to defer their Social Security tax and take paid sick leave under the Families First Coronavirus Response Act (FFCRA). If this is the case, that will need to be reported on Form W-2 and on Form 941 (or 944, if your business uses that form instead).
Our CPA’s are eager to help you navigate the 2021 tax season, and we can start as early as you need us. Start off the new year by giving us a call and letting us assist you and your business!