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The Difference Financial Data Can Make in Your Business

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Having accurate and up-to-date financial data can be a game changer for any business. Whether you’re a small start-up or an established company, having reliable financial information is essential to making effective decisions that can lead to growth and success. By staying on top of your financial data, you can gain valuable insights into your spending, profitability, and cash flow. With the right data in hand, you’ll have the power to optimize operations and maximize profits. Your Business’s Financial Data Is Needed to File Taxes Correctly You can’t file taxes without accurate financial data. And today, obtaining and organizing that data is becoming more complex. Your employees are a mix of traditional W-2 hires and independent contractors, all of whom could be working for you from anywhere in the world. Your revenue streams are diverse, and at least a few of them are through online and third-party channels. And your business ventures are likely targeted to segmented audiences all over the country and the globe. Without a good understanding of your financial data, you can’t accurately report your taxes or the tax information your associates, clients, and vendors need to stay compliant with the tax code. But financial data is so much more than just gross revenue, tax liability, and payroll. Let’s go through some of the key functions and benefits of a strong financial data strategy. Keep an Eye on Trends Every business has to carve out its own niche in the industry they are trying to be a part of. And a big way to do that is to keep an eye on trends to determine what products, services, and current events are influencing the consumer market that the business is catering to. There are very few businesses and industries that don’t have either a busy season or an off-season. In many cases, they have both. And because of that, following industry trends becomes even more important. There are also so many financial and economic trends right now that are …

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Common W-2 Mistakes

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Filing taxes is an essential part of the end-of-year process for businesses and employees alike. It’s important to get it right so that everyone involved can benefit from accurate taxation and avoid any potential penalties or fees. Unfortunately, mistakes on W-2 forms are common, leading to unnecessary stress and wasted time. This article will explore some of the most common W-2 mistakes and offer advice on how to correct them. Common W-2 Mistakes: Not Knowing the Difference Between W-2 and 1099-NEC We have already covered some of the most common 1098, 1099-MISC, and 1099-NEC mistakes and how to avoid them in a previous blog article. But today we wanted to talk about the difference between a W-2 and 1099-NEC employee, as well as the importance of catching and correcting mistakes on W-2 information returns before you’ve filed or reached out to a tax accountant. As most of us know, W-2 employees are employed directly by an organization. Those workers who often classify themselves as contractors or freelancers, and don’t have consistent work, pay, and benefits provided by the companies they work with will more likely be classified as 1099 workers. And this is one of our first hidden mistakes that many businesses and employees are unaware of or overlook and that’s the misclassification of employees. Because 1099 workers are responsible for paying more payroll and related taxes (like Social Security and Medicare), it benefits employers to not classify them as full-time W-2 employees. However, independent contractors who work via 1099 and W-9 forms are also much less beholden to the companies they are serving. If this is not the relationship you have with the people you are employing, then you need to classify them as W-2 employees, which keeps you in compliance and also allows for an easier time when it comes to running payroll. Not Double-Checking Employee Info Your employee tax information and details can change at any time throughout the year. Don’t wait until …

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Tips for Reducing Your 2023 Business Tax Bill

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The upcoming tax season can be a daunting prospect for any business. With the 2023 business tax bill quickly approaching, it is essential to begin preparing now in order to maximize savings for your 2024 tax season. Planning ahead and understanding the implications of the Inflation Reduction Act will help. Fortunately, we’ve compiled some great tips for reducing your 2023 business tax bill (which will be paid during the 2024 tax season). Capitalize on the IRA The Inflation Reduction Act (IRA) was signed by President Joe Biden in August of 2022, and there are some big ways your business could use it to help reduce your federal income tax liability. According to a White House briefing, “the Inflation Reduction Act will reduce costs for small businesses by maintaining lower health care costs, supporting energy-saving investments, and bolstering supply chain resilience.” The IRA extended the American Rescue Plan’s premium tax credit for the Affordable Care Act (ACA) plans by extending them through 2025. Because of these lower healthcare costs, entrepreneurs will be able to use those available funds to help grow or start their small businesses. Small businesses will also receive a tax credit that covers 30% of the cost of switching to solar power solutions. This switch also helps lower long-term energy costs for SMB owners. And this energy efficiency can also mean a tax credit of up to $5 per square foot when these efforts deliver lower utility bills. SMBs can also see a 30% tax credit pertaining to the expenses of purchasing electric and fuel cell model vehicles – another short-term money saver that lowers expenses in the long term. On the personal side, you can upgrade your car by switching to an electric vehicle. Thanks to the IRA, you can receive up to $7,500 in tax credits for the purchase of a new electric vehicle. There are a few stipulations though: your new car must not have a price tag of more than $55,000 – if you’re buying an SUV, van, or …

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Best Practices to Make Your Business Payroll and Taxes Easier

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Running a business is a complicated process, and the payroll and tax compliance tasks associated with it can be especially challenging. Fortunately, there are several best practices that business owners can use to make the payroll and tax processes easier and more efficient. With some planning and preparation, managing these tasks can be much simpler. In this article, we will discuss some of the best practices to make your business payroll and taxes easier while staying compliant with regulations. Payroll and Taxes: Key Components to Your Business Operations Aside from payroll as a necessity for your business continuity, there are several compliance and legal reasons to keep your payroll and taxes in order. And because your payroll affects your employee payroll tax as well as employer payroll tax and returns, you want to have things in order every time you run payroll, not just during tax prep season. This also helps keep you from missing quarterly tax payments for wages and other business items. There are several different types of payroll and payroll-related taxes, and we wanted to go through those here as we kick off this list of best practices. First and foremost, your business is responsible for preparing and filing Form W-2 for any and all wages, tips, and other compensation you’ve paid your employees in the last tax year. You’ll also need to withhold social security and Medicare taxes (including the 0.9% Additional Medicare Tax for wages and compensation that exceeds $200,000 in a calendar year) from those wages. It’s important to note that any freelancers or independent contractors you work with will not have these things withheld from the payments you send them – they are responsible for that withholding as they are self-employed. However, you will have to send them the correct 1099 forms (most often a 1099-NEC) so that any income you pay them totaling more than $600 can be reported. Then each contractor will pay the self-employment tax on …

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Recent Ballot Measures That May Affect Business Taxes

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As a business owner, it is important to stay up to date on the latest ballot measures that could affect your taxes. Keeping informed of these measures can help you better prepare for future tax changes and maintain a healthy financial plan. Recent ballot measures that may affect business taxes have been proposed in various states across the country, so it is important to understand what might be in store for your business. Big Changes to Federal Business Income Taxes Some of the largest ballot measures and legislative changes that may affect business taxes stem from the 2022 Inflation Reduction Act (IRA) and the expiration of certain provisions in the 2017 Tax Cuts & Jobs Act (TCJA). The TCJA also allowed for full capital expensing for businesses from 2017 to 2022. On January 1st, 2023, that deduction was decreased by 20% and will continue to decrease gradually until 2027. Income tax brackets have been adjusted for inflation for the tax year 2023. For more information, check out our recent article on the topic. These changes are placing heavier burdens on businesses in the 2023 tax year. But, many state-level initiatives are being implemented as well. These things will aim to even things out and help businesses counteract their heavier federal tax responsibilities. State Changes That May Affect Business Taxes Before we start here, we want to make it clear that this article is not an exhaustive list of every state’s tax code changes for 2023, and we also want to remind taxpayers that there are likely to be more changes to your state’s tax code before the year is up. It’s important to stay up to date on current tax initiatives and legislation. You can do this by regularly checking the IRS website and your state government websites, or you can reach out to a trusted tax professional throughout the year. With that said, here are some of the biggest tax changes we’ve found that will affect certain states and businesses within them in …

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4 Common Small Business Tax Mistakes

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As a small business owner, it is essential to understand your tax obligations and stay on top of filing deadlines. Unfortunately, mistakes can happen, and it is wise to be aware of the most common issues that arise when filing taxes for your business. In this article, you will learn about the most common small business tax mistakes so you can take proactive steps to avoid them. Knowing what to look out for can help save you time and money when preparing your taxes. Procrastination With the tax season in full swing, it is important for small business owners to stay informed and up to date on their taxes. Unfortunately, many small business owners make common mistakes when filing their taxes that can be easily avoided. One of the most common business tax mistakes is procrastination. We know, there are very few people – especially business owners – who jump for joy once tax season hits. But it’s important to think about your tax season the same way you think about your business plans: even if you are living your dream of running a business you love, there will be things you don’t like doing. And you can’t put those things off until the last minute and expect the rest of your operations to run smoothly. The same is true with your taxes. In fact, when you file your taxes and your information returns early, you make it easier on yourself and the recipients of those forms to find new ways to make the most of this tax season. Not Verifying Vital Information This is one of the more obvious mistakes that so many of us make, and so few of us think we will make. It’s tedious, but a major mistake that millions of tax filers make every year is not verifying vital information on every single document page. You should always take the time to double-check that the correct name, Social Security Number, and date of birth are on your forms. The same is true for your business information, TIN, and related identifiers. The only thing worse than filing taxes is having …

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