Staring down tax-related deadlines can be the stuff of nightmares if you haven't prepared in advance. Taking a few simple steps sooner rather than later will make life a little easier for your small business this coming tax season.
Here are our essential time-saving tax preparation tips to close out 2017:
- Clean up your vendor records. Confirm that you have W-9 forms on file for all vendors. Plus, merge duplicate vendors and deem as "inactive" any vendors that have gone unused for two years.
- Collect W-9s. Each time you take on a new vendor, be sure to collect a W-9 form to determine eligibility for 1099 status. In fact, make submission of a W-9 a requirement before issuing the first check — you'll find vendors will comply faster. When requesting W-9s manually, don't use email (which is notoriously non-secure). Rather, use a tool like Track1099, which allows you to request, obtain and store W-9s securely.
- Include limited liability corporations (LLCs). While you don't have to issue 1099s to corporations, the same doesn't necessarily hold true for LLCs. The answer depends on how the LLC elects to be taxed by the IRS (e.g. as a sole proprietorship, partnership or corporation). "In general, you are expected to send 1099-MISC forms to most small-business LLCs," according to author Anita Campbell at Small Business Trends.
- Update addresses. Confirming that you have the correct address for every vendor will save you the trouble of re-sending forms that are lost or delayed.
- Remember the new 1099 deadline. That's January 31, 2018. Make sure someone at your business gets on this task with plenty of time to spare.
That's it! Cover these tips in a timely manner, and you'll kick off the new year with a little less stress.