As another year comes to an end, now is the best time to start preparing for your upcoming reporting requirements. These requirements can consist of, but not be limited to, the following:
- Sales and Revenue
- Operating Expenses
- Business milestones
You, as a self employed person, should always have your finger on the pulse of your businesses Income and Expenses. While you may have an Accountant who will assemble and compile this information into reports for filing and the public review, you are responsible for the details therein. Let’s touch base on some key points to consider:
Sales and Revenue
If your business is required to pay Sales and Use taxes on its services and products, this would be a great time to do a “reverse Sales review” to determine your tax liability for the year. Even though you may in some cases report monthly, now is the time to look closely at your final report. Please note that the IRS requires this year (2011) that merchant card (Credit cards) and third party entities (PayPal) payments must be reported separately on a 1099 (k). See Instructions for Form 1099 k for details.
There are always plenty of places to advertise your business services during the holiday events, however at this time you should focus on the previous marketing plan you had in place. Ask yourself if you had a rate of return that was what you expected. Mark the successes and make note of the shortfalls so that moving forward you can learn to earn from the past.
Even though you may have a lean mean budget in place, the purpose here for year end is to take advantage of some tax situations that would benefit your company such as the following:
- Payroll – if there is available cash, now is the best time max out your retirement contributions to a 401 (k), SEP, IRA, etc. Remember that these financial instruments can greatly reduce your business and personal income tax bite as well if planned properly. Finally, ensure that tax deposits for your payroll are in the correct pay periods. This you can do by reviewing your EFTPS (Electronic Federal Tax Payment System) report. Also, start marking your due dates for wage reporting (W-2’s, 1099’s, 940, 944, 945 schedules to the Federal government).
- Vendors – you should ensure that all vendor information is current and payments are up to date to avoid having to make corrections to your 1099’s.
- Customers—touch base with your customers to verify service and product quality, as well as preparing for next year’s sales. Since many businesses are preparing their sales and forecasting schedules at this time, this is a golden opportunity to ensure that you are part of their goals.
Strategize, enjoy your successes, and learn for the short comings.
For more detailed information, please review Publication 509, as well as your state tax agencies.