2017 is here, meaning it is crunch time for your small business tax preparations. The beginning of the year is a hectic time for most small businesses and makes it difficult to gather all of the appropriate documents and expenses you will need to file taxes. Most small businesses will have started preparing your taxes, but if not let this small business tax preparation checklist serve as a tool to get your company on track and ready.

Important Documents and Numbers

Its important to gather all the documents and numbers you need to have them handy and ready for filing your small business taxes. Ask your accountant or tax specialist for a list of which documents and numbers will be necessary to collect.  The list below is a good start:

  • Income
  • Gross receipts from sales or services
  • Sales records
  • Returns and allowances
  • Business checking/savings account interest
  • Inventory
  • Materials and supplies
  • Expenses
  • Advertising
  • Phones related to business use
  • Computer and internet expenses
  • Transportation and travel expenses
  • Local transportation
  • Commissions paid to subcontractors
  • Depreciation
  • Business insurance
  • Business loan interest
  • Professional fees
  • Fees to lawyers, accountants and consultants
  • Office supplies
  • Office space rent
  • Business-use vehicle lease expense

Additionally if you conducted any business inside your home you can ask your accountant if you qualify for a home office deduction. If this is the case you will need the square footage of both your home office space and your entire home. You will also need the cost of your mortgage or rent, home utilities, and any home office expenses on improvements (i.e. building costs, furniture and equipment costs.) For additional help deciding what you may need check out our tax services and contact us for a free consultation.

Tax Filings for Employees and Contractors

The deadline to mail your employees and your independent contractors their appropriate tax forms is approaching. By January 31 employers must send their employees their W-2 and contractors their 1099. The W-2s must be totaled and filed with the Social Security Administration along with a W-3 form.

Make sure you order your W-2 forms ahead of time because you will need new forms each year. Verify your employee’s names and social security numbers with the Social Security Administration ahead of time. You can do that online here.

Tax Deductions and Credits

While both wonderful for small businesses, tax deductions and tax credits are different. Tax deductions will lower your taxable income. See here for a list of 25 small business tax deductions you should be utilizing. Tax credits will reduce the actual amount of taxes your small business owes. There is a wide range of tax credits your business could be using and you can view them on the IRS website.

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These Deductions are Often Overlooked

Charitable Contributions

The charitable contribution tax deduction works exactly how it sounds. You can donate assets that still hold value such as a computer, equipment, furniture, or more to charity and benefit from a tax deduction of that value.  Its perfect when you have excess equipment you don’t use anymore and if the tax deduction is of more benefit than outright selling the asset. Not to mention the act of good will. Keep this in mind when making your tax preparations for your small business.

Business Gifts

The holiday season has just ended and some startups may have given business gifts to their employees or clients. These business gifts are tax deductible for up to $25 per person (per year).  However, the $25 limit only applies for gifts directed to particular people. If, say, with a loyal client you drop off a $50 holiday cheese basket for all employees to share, then all $50 is tax deductible.  If you were to send that cheese basket specifically to the CEO, you would only be able to deduct half.  It is also important to note that gifts to employees could be treated as income by the IRS if not claimed. See Publication 15-b for more information on that.

Education for Employees

When making your tax preparations its important to not forget that employee education is deductible.  These educational expenses typically include the cost of books, equipment, fees and tuition. Your company can claim a business deduction for educational employee benefits paid while at the same time, your employee does not have to count the reimbursement as taxable income.

Written By Curt Mastio, CPA of Founder’s CPA

For more information regarding Small Business Tax please see our Tax Services.

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