Seven Tax Resolutions for Your Business in 2014
One of the wonderful things about a new year is that we can start fresh. Wipe away whatever happened in the past year and do things better this year. Here are some resolutions to consider. Some are quite basic and only apply to very small businesses. Other resolutions may help to improve your business.
1) Open a separate bank account for your business.
Even if you are self-employed, you’re better off with a separate business account. This makes audits less intrusive and makes you feel like you’re running a real business.
2) Set up a separate card (or cards) specifically for business use.
This will not only help you track business costs, it will keep them separate from your personal charges. If you cannot afford to pay the entire balance due on all your credit cards, some business owners pay their personal cards first. Personal interest expenses cannot be deducted, but business interest is deductible.
3) Keep regular logs for your business mileage.
You’d be surprised at how many people don’t bother. The IRS and Tax Court are becoming stricter about the lack of logs, and this can cost you your vehicle-related deductions. You must be able to prove your total mileage for the year, as well as your business mileage.
4) Have your workers fill out all new forms for 2014.
Give your employees new W-4s. Give your freelancers new W-9 forms. Give your overseas (non-resident alien) workers new Form W-8-BENs. Be sure to get them back and signed before issuing the first 2014 check to your freelancers. If any freelancer, domestic or international, does not provide the signed form, withhold 30% of their compensation and pay it to the IRS as withholding on their behalf – until they give you the forms. Note: Establishing that you will be reporting their compensation early in the year helps avoid misunderstandings later on.
5) Evaluate the people who provide home-based services to you.
Are they household workers? Do you need to be putting them on payroll? For reference, read the Household Employer Tax Guide.
6) Update your business plan – or create one this year.
Setting targets and tracking your progress can help you improve your profits. Don’t just make a list of numbers (like projected sales, etc.). Describe your target markets and how you can reach them at the lowest possible cost. Chapter 2 of Small Business Taxes Made Easy can walk you through the process. You’ll find free business plan templates at the SBA and SCORE websites.
7) Review your vendors.
Are you getting the best prices and the best service? Don’t stay in a rut due to habit or misplaced loyalty. Replace vendors who no longer provide competitive pricing or the level of service you need.
These are just a few steps to help 2014 be more profitable and successful for your business.