Small Business Owner New Year's Day To Do List

Prescott Tax & Paralegal wishes you a blessed and prosperous New Year!  As we begin a new year there are a few steps that small business owners should take to ensure that accurate income tax returns will be prepared.

1. Get the odometer reading from each vehicle used in business.

Most small business owners use their personal vehicles in for their business. On January 1 of each year, they should take a photo of the odometer, or write down the odometer reading of each vehicle used in the business. Having the odometer reading helps your tax professional determine the percentage of business use of the vehicle.

2. Start a new mileage log to keep track of business miles.

The IRS requires that a written mileage log be kept if you claim mileage for your business. Apps such as MileIQ or Everlance can be downloaded onto your smart phone to keep track of mileage. To have an acceptable mileage log, you must keep track of the date, miles driven, and business purpose. For example: 1/1/2019, 12.2 miles, to office supply to pick up W2 forms.

3. Determine if any contractors need to be issued a 1099Misc.

If a non-employee received compensation of $600 or more, the IRS requires you to issue that person a 1099Misc. To issue the 1099Misc, you will need: Name, Address, Social Security Number, and Total amount paid during 2018. If you need help preparing forms 1099Misc or determining who should receive them, contact your tax professional. These forms must be mailed to the contractor and the IRS by January 31.

4. Prepare and issue W2s for employees.

If you have employees, prepare and issue forms W2 for your employees, or have your payroll provider do this. Forms W2 must be mailed to the employee and the IRS by January 31.

5. Complete bookkeeping.

Many small business owners do their own bookkeeping using software or ledger sheets. Finish your bookkeeping early. There is no good reason to wait. Most small business owners should be filing the business tax return in January. If the business is a partnership, or s-corp, then the owners or shareholders can receive the necessary documents to complete their individual tax returns. If the business is sole proprietorship, the income tax return can be completed early in the season when your tax professional is at their best.

Will the government shutdown affect filing my income tax return?

Right now, we are told that there will not be any delay in "filing" income tax returns. However, REFUNDS WILL NOT BE ISSUED UNTIL THE GOVERNMENT SHUTDOWN CEASES. Please plan on that. There is nothing your tax professional can do to hurry the refund. No, you should not wait to file your income tax return until the government shutdown ceases. File as your normally would - as early as possible.