Small Business Owners’ Tips for Tax Time April 15th isn’t exactly most people’s favorite date but there are some things you can do to make tax filing less stressful. Decisions you make throughout the year may have tax implications – you are much better off knowing that from the get-go. Discuss the following with your tax person as soon as they come up: • Have you changed your business formation from sole proprietorship to LLC or Corporation, etc? A change in type of business entity brings with it different tax laws, codes, etc. • Did you buy, sell or trade any fixed assets – like property, plants, vehicles or equipment? Fixed asset changes – include date and dollar amount of transactions – could affect tax liability due to depreciation. • Did you use sub-contractors? If you paid outside subcontractors more than $600 in a calendar year (and they are unincorporated) you must supply a 1099 form – postmarked no later than January 31 of the following calendar year. • Have you hired or terminated employees? A change in employee status means changes in tax items to be filed. W-2 forms must be completed by January 31st. • Document withdrawals from the company. Business owners typically take compensation in the form of payroll and owner’s equity withdrawals. For the purposes of tax filing, these should be kept separately and classified correctly. Payroll is classified as an “expense”; withdrawals are considered a “reduction in equity”. • Keep all documentation as long as you are required to. If you are ever audited, you will need to substantiate your filing with proper documentation. If you aren’t sure how to handle taxes, speak to a PCG staff member for a free consultation or to establish an account and leave it to the experts.