At the beginning of every year, most businesses find themselves in a rush to complete all of the necessary tax documents within the allotted time set forth by the government(s). They are busy reconciling all of their accounts in order to provide their tax preparer with the information that is necessary in order to file their income tax returns – which may be due as early as March 15th in some circumstances.
Of utmost importance is the issuance of two important earnings-related documents:
The W-2 and the 1099.
Form W-2 is for employees of a business which withholds income taxes. Most people work W-2 jobs. Employers pay half of the Social Security and Medicare taxes.Form 1099 is meant for any vendor, contractor or freelancer to which a business paid $600 or more for services or rent. Vendors using 1099 do not get taxes withheld and are responsible for paying the entire share of Social Security and Medicare taxes.
Both the W-2 and 1099 forms must be mailed to employees and contractors with a postmark no later than January 31, 2015.
If a business fails to do so, it will face stiff fines.
One big item that is often overlooked is the pre-planning necessary to set up a retirement account, such as a SIMPLE plan or a 401K plan. It is too late now for the current tax year.
However, if you set this up now in preparation for the next tax year, you will have more options. Now is the time to get ahead; do not wait until the summer or fall!
Another important activity at tax time is looking for deductions. Most business owners are diligent about getting all of their deductions together, but sometimes they are unaware of where to look for more. This is where the value of working with financial professionals becomes self-evident.
An experienced Certified Public Accountant can guide you and your business through volumes of tax laws and give you objective advice about your situation – whether you work in several different tax jurisdictions or from your home.
To find out more, contact us at firstname.lastname@example.org.
Are your tax documents already in the mail?
Susan A. Moussi, CPA, CFP®, CDFA SMD Tax & Divorce Financial Planning Consultants, Inc. Phone: 614.429.4172