The summer is a time when business may be slow or quiet, which offers you — the entrepreneur or small business owner — the opportunity to give taxes and accounting some much-needed attention. Because money, finance and taxes never take vacations.
Here are some ideas for you to keep in mind Monday through Thursday, before those summer Fridays are upon you.
Set Up Some Dates
Renewal dates, that is. For example, is your business license with the city up to date? Tardiness can be costly, depending on where you’re located. Review your list of the different licenses you use to operate your business and see what needs to be renewed. You might make your deadlines in the pinch and possibly save a lot of money.
Establish An Accounting Method
Consistency is key when it comes to reporting income and expenses. There are methods for cash and accrual.
For cash, you will report income in the calendar year it’s received and deduct expenses in that same year you pay them. So if you as a solo practitioner are hired for a three-month contract between October and December of this year, it will all be listed under 2016. However, if it were to spill over into January 2017, then itemize those payments and deductions for 2017 and keep 2016’s moneys separate.
When it comes to accrual, you report the income in the year you earn it and deduct the expenses in the year in which they are incurred. This holds true even if you receive the income or pay the expenses in a future year.
Be On The Lookout For Scams
Because companies and people have their guards down in the summer, the scamsters are abound and posing as IRS agents. It’s a good idea to keep your employees on alert about this unfortunate part of being in business.
Remind them that real IRS agents will not:
- Call you about a tax bill without first sending a notice by snail mail.
- Demand you pay taxes immediately or threaten to bring in other agencies to collect or arrest.
- Ask for credit or debit card numbers over the phone, or demand that you pay taxes a certain way (like by debit card).
There are some more ways these reprehensible people will try to jilt you, your business and your employees out of money, so keep everyone informed and on alert.
Contact Brinen & Associates to discuss your tax and accounting needs.