Year-end Tax and Payroll Strategies for Small Companies from ADP
When it’s the end of the year, most small businesses start worrying about how to plan and prepare for the upcoming tax season. There are many software tools that will record the financial activity of a small business throughout the year; however, it is not always possible to consider all the scenarios to minimize the taxes owed to state and federal governments. Many payroll providers, such as ADP and Intuit, offer tax-saving tips and pointers to save on the amounts owed to Uncle Sam. A number of year-end tax and payroll strategies are offered by ADP every year to help small businesses.
Review W-2 and 1099 Details With Employees
The accounting team must review all tax forms thoroughly before they ever file 1099 online – or a W-2 form – with the details provided by the employees. It is recommended to have the employees re-verify the details of their W-2s and 1099s before running the last payroll report for the year. The corrected information must be handed over to the accounting team or the payroll provider at the earliest possible date. If a W-2c form is required to correct an employee’s W-2, then the accounting and payroll provider must be notified and coordinated with immediately.
If using a 3rd party service to efile 1099 forms or W-2’s, consider several things first. Do they have the technology infrastructure to be as safe as possible considering the current standards? Do they have a history that reputable enough to trust them? What other services do they offer along with the use of their e-filing technology? If you’re looking for a guide visit www.eFil4Biz.com to see what you should expect in a trusted e-file service.
Verification of Tax IDs
The accounting team must review and verify the tax IDs of all employees on payroll. It is important to fix all errors to ensure that the tax IDs on record are accurate. This must be completed no later than the last payroll cycle for the year 2014.
Adjustments to Employee Paychecks
Any adjustments – including void checks, manually processed payroll checks, and erroneous payments – needed for employee payroll must be addressed before December 31, 2014. All these cases must be sent to the accountant and payroll provider before the end of the calendar year.
Recognizing a Responsibility to File Taxes
Most small business owners are busy with increasing their sales and growing their business. The business owner must realize his or her responsibility to file taxes before the deadlines set by the IRS. Typically, business owners or accountants are responsible for filing taxes. Tax advisors must be able to help business owners understand the responsibilities related to filing a company’s annual taxes.
Missing Wages and Miscellaneous Income Tax Credits
Items such as COBRA payments, fringe benefits, tips, employee moving expenses, employee reimbursements without proper receipts, and expenses towards annual parties must be reported to the accountant and payroll provider no later than the last payroll cycle for 2014.
Knowing the Impacts from the Affordable Care Act
The rules and regulations stemming from the newly-introduced Affordable Care Act are complex. It is important to work with a CPA to understand the impacts to a small business and the possible implications while filing taxes. There are many free training sessions available online for small businesses to learn more about the Affordable Care Act.
Setting up Retirement Plans
Business owners could set up retirement savings plans like 401(k)s after consulting with their tax advisors, CPAs and financial advisors. Business owners must understand the eligibility, deadlines and tax implications while setting up retirement plans. Furthermore, business owners must ensure that any eligible bonuses are paid to employees. The bonuses paid and related taxes are tax deductible. Depending on the tax system being used, you could pay bonuses either by December 31, 2014 or March 15, 2015.
Work with Accountants
Accountants or tax advisors know the best options to minimize taxes and take maximum advantage of tax laws. Tax laws constantly change and evolve during the course of the year. CPAs or tax advisors must be able to help small business owners with the nuances of tax laws. Working with accountants or tax advisors will also help business owners keep accurate records and to ensure that they are in compliance with tax laws and regulatory filing requirements.
There are many ways to improve the tax filing process for a small business. The tips and guidelines provided by ADP are valuable tools to assist business owners with preparing for tax filing seasons and also to keep pristine records of financial and payroll data. Apart from the tips provided by ADP, tax advisors must be able to guide businesses with the necessary steps to minimize errors, reduce tax amounts and ensure a smooth tax filing for the tax year 2014. Most payroll providers have automated checks to help small businesses identify any required data that must be gathered before the end of the tax year.