Entrepreneurs have a lot on their plates. In addition to making sure day-to-day operations run smoothly, they have to keep an eye on every aspect of their companies. That means making sure vendors get paid, equipment is up to date and employees are satisfied. Then there’s the technical side of things, the so-called “back room” where specialists maintain cyber security or attend to database integrity that can get the job done.
But what about taxes? If you started out on a shoestring and cut a few corners by doing the books yourself and felt confident to efile your taxes, it might be time to address the obvious. Unfortunately, too many micro-businesses put accounting tasks into the hands of founders who are competent enough to look after money matters until the first tax season arrives. All too often, small business owners receive letters from the IRS asking for back-taxes or informing the accounting department that they’ll need to file quarterly returns.
There’s no need to panic if you receive such a notice from Uncle Sam. If you haven’t already addressed the fine points of your situation, now is the time. Here’s the least you’ll need to do while keeping in mind that there are several ways to go:
Pay Up ASAP
If the IRS hits you with a bill, don’t panic. Pay the amount as soon as possible, preferably in person at your local federal office. You have some leeway here because the IRS typically won’t bill you just for neglecting to file quarterly. But even if they don’t issue you a formal bill, make absolutely certain that you have the funds available to pay for prior quarters’ bills, as if you did have to fork over the money right away. This is why it is incredibly important to do tax preparation as soon as possible. There are services available that can help you with this and keep you above board.
Educate yourself
Staying informed is one of the best ways to manage your business’s financial responsibilities. Attending a Small Business Tax Strategies Seminar can equip you with essential knowledge about tax regulations, deductions, and filing requirements specific to small businesses. These seminars provide expert advice on common tax challenges and offer practical tips for maximizing tax savings while staying compliant with current laws. By investing time in learning about tax strategies, you can make more confident financial decisions and avoid costly mistakes when tax season comes around.
Hire a CPA or Enrolled Agent
Unless someone currently on your team has accounting experience, you’ll need to bring on a CPA or enrolled agent to take care of the job. While you may think you can handle this yourself, you will need expert knowledge about everything from income tax to non resident tax to be able to successfully file your business’s taxes. But this is one area where you have a couple of choices. First off, it’s easy to outsource all your accounting if you don’t feel like a permanent staff member is necessary.
Second, whether you outsource or not, you can hire a CPA or an enrolled agent to handle tax matters. Both can represent you in front of the IRS if the need ever arises and both have the skill sets your company needs. CPAs tend to charge more because they have more training in all aspects of accounting while enrolled agents specialize in tax matters.
Re-do Your Budget to Reflect a Quarterly Tax System
Whomever you hire to handle your taxes from this point forward should be able to handle this chore for you, but everyone in the company should be aware that you’re now like all the Fortune 500 firms, in that income, expenses and taxes are going to be handled and reported four times per year. This new system can be a wake-up call for tiny firms that are used to filing as sole proprietors on their personal returns each year. Once you become an LLC, partnership or corporation, you enter into the world of quarterly financial reporting.