Blog Layout

Small Business Owners: Year End Reminders That Will Keep You Compliant & Save You Tax

nicholas • Dec 08, 2017

As 2017 winds down, it is important for business owners to analyze how the year has went before it is too late. Taking a look at the situation now could present you the opportunity to save money in taxes when it comes time to prepare your tax return.

We hope you have achieved all the goals you set for 2017, and have 2018 goals ready to implement!

If you didn’t achieve or set goals for 2017…Why not? Without a game plan and goals you get what you set… NOTHING!

Things to do before year end & reminders

These are reminders to all Wisconsin small business owners to help stay compliant with IRS laws and also save money in tax.

Christmas Gifts/Bonus – Gifts and/or bonuses paid to employees in excess of $25.00 must be included in W-2 income as payroll.

  • Gifts to customers and clients are also limited to the $25.00 limit(per customer/client)! Anything over that amount is not tax deductible!!

Christmas Party:

  • A company party that involves employees can be 100% tax deductible, it is not subject to the 50% Meals & Entertainment rules.
    • Document & notate this event (costs) as such.

W-2’s – Make sure all employee information is correct prior to filing W-2’s. This includes name, address, and social security number.

  • Employers must deliver W-2s to employees by the last day of January. If statements are late or incorrect, employers will incur penalties.

1099’s

There are a variety of 1099 forms that account for other sources of income. Issuers must mail out these 2017 forms to recipients by January 31, 2018 . The most common form, Form 1099-MISC, must be provided to the non-employee and submitted to the IRS for everyone to whom you paid at least $600 or more during the tax year. It is important to note that this 1099-MISC deadline applies when reporting non-employee compensation (Box 7).

  • $50 per Form 1099-MISC if late for 30 days or less.
  • The penalty increases to $100 per form if late more than 30 days.
  • If you know you will not file on time, businesses can acquire a 30-day extension to file 1099s by filing IRS Form 8809: Extension of Time to File Information Returns. The form must be filed by February 28 and the extension is not granted automatically.

Mileage

The rate for 2017 is 53.5 cents per mile. 2018 rate has yet to be released, but usually it is calculated based on cost to maintain a vehicle on the road ( Gas prices are a big variable).

Keep track of:

  • Odometer Readings recorded
  • Mileage Logs maintained
  • Expense reports

Charity or Advertising?

Why does it matter? There are limitations for how much you can deduct of charity deductions. When helping out a cause, is there a way to promote your business? If so, document this and it will move the deduction to advertising.

Bad Debts

You cannot have a bad debt if you are on a cash basis unless it’s a NSF check that’s noncollectable!

  • Review your Accounts Receivable for any bad debts (noncollectable). You can write off your bad debts if:
    • In order to have a Bad Debt, you must have recorded it in your sales!
      • You must have made every reasonable attempt possible to collect –(document your attempts).
    • List or submit your Bad Debts.
    • Why do you have a bad debt? It may be a tax deduction but it is lost profits!
      • Verify before doing business
      • Change terms/conditions of sale

Equipment Needs

Is there a piece of equipment your business needs (not wants)?

  • If put into service before 12/31/17 it could be fully written off, thus saving tax dollars now!
  • Make sure the equipment is needed & necessary! Spending money just to save tax dollars is a losing financial transaction. It must make you money (Investment).

Old Records/Files

  • We have posted on our website the guidelines for how long you are required to keep your various business records. Please check out our website!
    • Remember to properly dispose of these records
    • We do offer the use of our shred service (limited) for a MDA donation- (Ask our office)

 

Corporations

  • Is your corporation up to date? Shareholder meetings, minutes?
  • Should you file an election to avoid having to do this?

Inventory:

Do you have your year-end inventory planned? The IRS requires that you must take a physical count of all inventories on hand as of December 31.  This list would include a description of each inventory item, quantity on hand, unit price, and total cost. Work-in-progress inventory is valued at the cost of materials, labor, and other direct costs included in the unfinished inventory items as of December 31.

  • If you feel that this is not important or do not have enough time, ask yourself, if this was your cash on the shelves, would you want to know all your money is there?
  • An accurate inventory can reveal a lot of what is wrong with your business!
    • Gross profit %
    • Theft?
    • Too much?

Wishing you and your family the best this holiday season!                         

Hammernik & Associates

See More Blog Posts

By nicholas 24 Dec, 2020
The “rescue package” has arrived. The COVID Relief bill is a whopping 5,593 pages long. I know you don’t want to sit and read through that novel, so I am here to summarize, in plain English, how this bill is going to effect your taxes. Have you ever been on a roller coaster before? A… The post The COVID Relief Bill Summarized appeared first on Talking Tax to Milwaukee.
By nicholas 04 Dec, 2020
This past week, I finally dove into a project that I has been brewing in my mind for a few years. I published my first podcast episode today. Is it any good? I’m not quite sure. To be honest, I’m not too happy with how it turned out. However, I accomplished part of my goal.… The post The Tax Slang Movement appeared first on Talking Tax to Milwaukee.
By nicholas 13 Nov, 2020
Your goal should be to get the IRS to owe you money. Of course, the IRS is not likely to cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you pay less in taxes.   Here are seven powerful business tax-deduction strategies that… The post 2020 Year-End Tax Savings Tips appeared first on Talking Tax to Milwaukee.
By nicholas 31 Jul, 2020
  With the 2019 Tax Filing Season just behind us, it is difficult to think of the next filing season, however, there are many issues that need to be addressed now, rather than wait. At this most difficult time for our taxpayers, we want to assure you that our firm is here to assist you… The post COVID-19 Tax Updates appeared first on Talking Tax to Milwaukee.
By nicholas 05 Jun, 2020
The goal of the Milwaukee Restart Program (Restart) is to help local businesses that suffered as a result of the pandemic to reopen and adapt to the “new normal” Eligibility Restart grants will assist for-profit businesses located in the City of Milwaukee that have 20 or fewer full-time or full-time equivalent employees and greater than $0 but less… The post Milwaukee Restart Grant Program appeared first on Talking Tax to Milwaukee.
By nicholas 05 Jun, 2020
Over the past few months COVID-19 has changed the way a lot of small businesses operate. Some have been unable to be open, some have adapted and changed, and some have even thrived. The Government had made a few loans available to try and help small businesses keep their employees employed and to also cover… The post Additional Grant Becomes Available For Wisconsin Small Businesses appeared first on Talking Tax to Milwaukee.
By nicholas 14 Jun, 2019
Choosing an Accountant Who Puts Your Goals First There is an endless supply of do-it-yourself tax preparation tools and websites, and the sheer volume of options can lead you to believe the process of filing your returns is simple. However, a DIY approach only works if you are satisfied with paying more than necessary. Tax… The post Finding the Right Accountant to Successfully Guide You Through the Tax Maze appeared first on Talking Tax to Milwaukee.
By nicholas 15 Feb, 2019
  Choosing an Accountant Who Puts Your Goals First There is an endless supply of do-it-yourself tax preparation tools and websites, and the sheer volume of options can lead you to believe the process of filing your returns is simple. However, a DIY approach only works if you are satisfied with paying more than necessary.… The post Finding the right accountant to successfully guide you through the tax maze appeared first on Talking Tax to Milwaukee.
By nicholas 08 Feb, 2019
  How do you know if your rental property qualifies for the 20 percent tax deduction under new tax code Section 199A? Just what we need–something else to learn along with all of the other tax code changes this year. Well, maybe not. There is a piece of good news: we won’t be required to… The post Does my Rental Property Qualify for the New Section 199A Deduction Under Tax Reform? appeared first on Talking Tax to Milwaukee.
By nicholas 07 Dec, 2018
Your company’s profitability depends not only on sales, but also on effective cost management. Are you adequately addressing the cost side of the business equation? Analyze Your Cost Structure You probably can readily identify the products and/or services that are generating your greatest sales volume. But can you identify all the costs associated with providing… The post Do You Truly Know Your Business Costs? You Better! appeared first on Talking Tax to Milwaukee.
More Posts
Share by: