Small business accounting is imperative to the function of your business. As you prepare to take on 2017, we’ve got a few tips that will help you make the most out of the tax year.
Small Business Accounting Tips #1: Prop 206
Prop 206 is going to be a big contender in the small business area in 2017. The high demands are sure to push the accounting numbers around, so it is imperative that you know the in’s and out’s of the passed proposition.
Small Business Accounting Tips #2: Increasing Minimum Wage
The biggest part of prop 206 is that minimum wage will increase to $10.00/ hour effective January 1, 2017. This will likely affect your bottom line, so small business owners need to sit down with their small business accountant to determine the best way to absorb the blow. You may need to make adjustments in spending, investing, benefits, or other goals you had planned for 2017. Get together with a trusted advisor to map out how you will increase payroll and continue to grow the company.
The same is true for restaurants, coffee shops, or any place that where employees receive tips. You’ll need to increase wages to $7.00 per hour effective January 1, 2017. We recommend that you also seek guidance from your small business accountant.
Small Business Accounting Tips #3: Keep Tracking of Paid Sick Leave
A secondary measure of Prop 206 is the addition of paid sick leave. If you have 1-14 employees, each employee must be given a minimum of 24 hours of paid sick leave (PST) each year. For companies with 15 or more employees, you must permit a minimum of 40 hours of PST per year. You’ll need to establish a system to keep track of the accumulation as well as the use of PST. We recommend working with a professional payroll company that has software in place to handle this type of record keeping. PayTech offers such services, which includes features where you and your employees can access PST records.
Small Business Accounting Tips #4: Give Receipts a Permanent Home
We can’t overstate the importance of keeping track of receipts. They are, after all, one of your
biggest assets income tax season. Without receipts, you can’t take deductions and are more likely to get audited down the road. Designate a place today that will be your receipt station. If you’re not the organizer type, buy a colorful box and keep in on your desk or in your glove compartment. Label it “receipts” and have your bookkeeper empty it out once a month. For the more tech-savvy, check out the numerous receipt-capturing apps out there. These are great because you take a photo of the receipt and immediately file it into an expense category.
Small Business Accounting Tips #5: Health Insurance
All business owners need to keep an eye on health care policies. The new administration talks of makes changes, however, we recommend proceeding with the laws as they are currently in effect until new ones are legally established.
Make note that all health Form 1095 (the proof of insurance coverage) must be filed by the new deadline of January 31, 2017. The previous deadline was March 31st. Missing this deadline could cost you in fines. Other healthcare forms have moved up the calendar, with Forms 1094B and 1095A, B, and C due by Feb. 28 via mail or March 31 electronically.
Offering healthcare coverage is a great way to attract and hold on to stellar employees. But some companies may not be able to afford the luxury of such benefit yet. Therefore, small business owners will be happy to know that there are more healthcare options available that the standard group health care coverage. For example, any company with fewer than 50 full-time employees is not required by law to offer health insurance to their employees. In fact, many companies are finding ways to hire freelance or contract labor for short projects, and therefore avoiding the large health care expense.
Small Business Accounting Tips #6: Purchase New Equipment Now
If you’re staring at a large tax bill for 2016, there may be a way to reduce it. Section 179 deduction was altered to read that equipment purchases less than $500,000 can be deducted as a lump sum in the year that it was put into service. Instead of using regular depreciation, which would allow small deductions over a period of five years, your business can take the full cost of qualifying equipment in the first year, as long as it is placed into service in the same tax year and is used more than 50 percent of the time for business.
So, if you were waiting on that new computer system, machinery, tractor, cash register, or another piece of equipment, you may wish to buy it now and write it all off, reducing your overall taxable income. Consult with your small business tax accountant before making the purchase to make certain it qualifies for the Section 179 deduction.
Small Business Accounting Tips #7: Know Your Due Dates
Small business owners should prepare themselves for some due date changes this tax season. The filing due dates for C-Corporations (Form 1120) have been pushed back a month from March 15 to April 15. On the other hand, the due dates for Partnerships (Form 1120) and S-Corporations (Form 1120-S) were pushed forward from April 15 to March 15.
It’s important to know if your due date has changed because small business owners who miss their deadlines will have to request an extension from the IRS. Yet, the IRS requires you to still make any estimated payments if you expect to owe money. Any money owed to the IRS is still due on tax day even if an extension is granted.
Pay-tech offers simply and easy to use solutions for your accounting needs. Our professional bookkeepers and CPAs work with you to determine the best accounting moves for your business. We can help you minimize tax payments, maximize deductions, and simplify payroll. We can take over the tedious stuff so you can focus on the things you love best. Check us out online and give us a call today.