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Payroll and Tax Mistakes to Avoid – by Benita Tyler

 When it comes to classifying the people who work for you it is important to know how to properly classify payments for payroll and keep your company in tax compliance. Here are a few things that will help you when it comes to reporting payroll at tax time.

 Employees

  1. An employee may be hired to work in your company on a full or part-time basis. You set their work hours, provide workspace and resources to carry out their assignment and have direct control over how they should perform the work. Assistants, teachers, and food service workers are examples of employees in a child care business.
  2. Having employees on staff means that you will be responsible for meeting Federal, State and Local reporting requirements. A payroll provider or accountant can assist in setting up income tax withholdings, completing payroll and filing payroll tax forms.
  3. Be sure to issue Form W-2 Income Tax Withholding to your employees at year-end. This document summarizes the gross earnings and income taxes that were taken out each pay period. File copies with the IRS, State, and local tax authorities, if applicable.

 

Contractors

  1. A contractor is hired to work on a project by project basis that has a start and an end date. Contractors provide their own tools and set their work hours. Most are business owners who have other clients in addition to the work they do for you. Some examples of contractors are art, dance, or language instructors that provide special classes for your business.
  2. When hiring contractors have them complete a form W-9 Request for Taxpayer Certification and Identification Number. This will provide the information that you will need for tax reporting.
  3. Issue a Form 1099-Miscellaneous Income to summarize the total of contractor payments for the year. Mail a copy to your contractors and tax authorities.

 

Payroll Deduction 

The employer payroll taxes that you incur are tax deductible. Be sure to provide the amounts to your accountant so that they can include them when filing your income tax return.

 To learn more about income tax reporting requirements for employers, check out Publication 15, Circular E, Employer’s Tax Guide here.

 About the Guest Writer: 


 

 

 

Benita Tyler

The Financial Messenger. President of TBS USA Accounting and Tax Advisors

Creator of the Position to Prosper System™
btyler@tbsusa.com
(313) 377-1080

To receive your FREE Tax Organizer and advice on tax issues and growing profits, visit http://www.tbsusa.com/

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Administration, Taxes

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Record Keeping Tips For Child Care Providers

Accounting is not just a once per year task. It should be scheduled as a regular part of your routine. You may be like many other business owners who hold off until they need financials prepared for tax time. If you are not having your books updated regularly you may become frustrated because you want to go directly to the top of the game but cannot figure out what is missing and why. A lack of financial information can keep you from advancing from one phase of business to the next.

  •   Accounting helps you make sound business decisions. Faced with several alternatives, the best choice is the one that you can assess qualitatively and backup with verifiable numbers. The financial results that you want your company to achieve can be quantified by information in your accounting system. It doesn’t matter if you are using a manual method of accounting or a sophisticated software program. As long as the method you choose gives the information you need when you need it then the choice of systems is entirely up to you.
  •   Success is where preparation meets opportunity. Always prepare financial reports to be ready to move on growth opportunities. With accounting reports you can make conclusions about ways to grow your business. Some examples where accounting information comes in handy other than at tax time include sales analysis and projects, weighing investment options, and deciding whether to include financing in your capital structure. All of the choices require forethought and accounting data helps reduce your financial risk.
  •  Avoid impulsive decisions. Successful companies are built by managers who use qualitative and quantitative data in investment decisions. Before tackling any new project, whether it is starting something new or expanding an existing company, you should always count the cost of the project. Use up-to-date information from your accounting reports to get a good idea of where the company stands now and how it should proceed in the future.

For more practical tips and advice, visit the financial center for business owners at http://www.tbsusa.com

About the Guest Writer: This blog post has been provided by Benita Tyler, The President of TBS USA Accounting and Tax Advisors and Creator of the Position to Prosper System™. Contact Benita at btyler@tbsusa.com: Connect with Benita on Facebook and Twitter!

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Administration

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