27.The Best Way to Prepare Your Business For Tax Season

Introduction: Far too many business owners are not prepared for tax season which could mean surprise bills, penalties, delays and a hectic start of the year so pay attention to the tips that we are sharing that will help you better prepare  for tax season. Also stick around for the tax tea where we discuss a home business owner that was convicted of filing false tax returns the tips and tea so stay tuned.

The Meat :

• Have a tax conversation - your result should not be a big surprise

  • Most people don’t have a conversation with their accountant until it is time to actually file which is crazy because that is their busiest time which means they probably dont have time to give you the best advice

  • Tax season should not be a big surprise to you if your accountant is having pre-tax season conversations with you

• Set aside the money for your liability

  • If your accountant is properly preparing you for the tax season you should have an idea of how much money to set aside in case you owe

  • Filing your tax return will cost you some money so set aside some money to cover the fees

• Gather your necessary documents

  • Ask your accountant before the end of the year - what information do I need

  • Start early and looking out for the documents that will coming in

    • W2 - from employers

    • 1099 - for contract work, miscellaneous income, retirement savings, etc

    • 1098 - from mortgage interest/bank loans

• 1099 prep

  • If you have paid for services from other vendors that exceed a total of $600 then you likely have to file a form 1099 with you the IRS by January 30 of 2023 (Rent, services, repair, contractors, etc)

  • Review your expenses by vendor and ask your accountant to highlight all that may apply

  • You will need a form W-9 (address, SSN/FTIN, name) from your vendors so request them early

• Deadlines and penalties - planning ahead, file early

  • January 16, 2023 - 4th quarter estimated tax - 

  • January 31, 2023 - 1099s, W-2 are due 

  • March 15 - Partnerships & S-Corporate tax returns - 

  • April 18 - eligible retirement contributions 

  • April 18 - tax payments and tax returns due (if filing an extension, the payment is still due)

  • October 16 - tax returns that have been extended