Tax planning and compliance is more than double-checking an annual tax return. Instead, it’s a complicated process encompassing multiple moving parts and regulatory agencies, which can vary from business to business and industry to industry.
There’s a lot to account for when it comes to tax planning and compliance, and it’s easy for a few tiny details to slip through the cracks and lead to more significant tax compliance issues. Unintentional missteps can be detrimental to a business’s operations and revenue, and for small business owners who are not professionally trained accountants, an outside resource like Waters Hardy is the best option to ensure financial peace of mind.
However, what is corporate tax compliance, and what are tax compliance services? As a business owner, how do you know if you need a tax compliance resource to ensure there are no unforeseen financial or legal pitfalls ahead?
The answer begins with understanding the general guidelines of tax compliance and the intricacies of your unique business structure and operations. It is also important to know what you can do now to safeguard your business in the future.
What are Tax Compliance Considerations for Small Businesses?
Businesses of all sizes and across all sectors need to pay attention to tax compliance, but the exact details of what this entails vary widely. Tax laws are quite complicated for businesses, and they effectively govern all the income reporting requirements, tax calculations, payments, and procedural requirements for everyday accounting and financial tasks.
In addition, many industries have further regulations or legal considerations when it comes to a business’ accounting practices, which is especially true when it comes to highly specialized sectors like financial, legal, or healthcare businesses. As such, small business owners often find that they must keep a detailed eye on multiple requirements – on a government and regulatory agency level – to ensure tax compliance across the board.
Tax laws and regulations constantly evolve in many ways, adding to this complicated issue. This can include changes to the law itself (such as new or edited reporting requirements) or changes to income thresholds, credits, deductions, or other avenues that can easily go unnoticed from year to year.
Essentially, ensuring tax compliance can be a full-time job. However, there are a few things that businesses can do to ensure, at the very least, that they have the foundational elements of tax compliance in place, regardless of their industry or future changes to the specific requirements involved.
Key Initiatives to Ensure Tax Compliance
Tax compliance starts with the following initiatives to ensure a business has everything in order when it comes to filing taxes, reporting income, or other required financial obligations.
Keep Exceptional Records
Diligent and accurate record keeping is the cornerstone of tax compliance, as you’ll always need access to the exact documentation and expenses of your financial activity. Be sure to have a solid and stress-free way to document your income, expenses, transactions, taxes, and other financial dealings that is both easily accessible and well organized.
There are certainly software tools in place that are specifically designed for tax reporting, but you may find that a tax compliance partner is a better fit to ensure that nothing slips through the cracks.
Brush Up on Employment Laws and Regulations
There are specific areas of a business that are more subject to varying laws and regulations than others, including and especially employment. As a business owner, you want to have an in-depth knowledge of all of these employment financial guidelines when it comes to considerations like minimum wage, overtime or other compensation, anti-discrimination regulations, hiring best practices, and much more.
A good starting point is to create an employee handbook outlining these rules so that you and your team are all on the same page when it comes to employment-related tax compliance. Just be sure that this is not a static document, as employment regulations are a field that tends to evolve and change regularly.
Consider Business Licenses, Permits, and Paperwork
Before your business even opens its doors, chances are that initial licenses, permits, and other paperwork need to be in place before you can start collecting revenue. From building or health permits to the financial structure of your company (like whether you are a sole proprietorship or a corporation), these foundational building blocks must be in place for tax compliance to be achieved.
If you are just starting, a tax compliance services provider can help ensure all of these potential requirements are in place. If you’re already established, your tax compliance partner can also be a resource to review that nothing has been missed and identify opportunities to make changes that will benefit your bottom line (like changing your business structure for more significant tax benefits.)
Consider Deductions and Credits
Tax compliance is more than ensuring your tax returns don’t send red flags to the IRS. It’s also an opportunity to save your hard-earned money by taking advantage of the many deductions and credits that are available to businesses. Brush up on these opportunities and keep them in mind throughout your operations – from record keeping to considering potential expenses or investments. By understanding the available deductions or credits, you can make smarter financial decisions that will benefit your business now and when tax season rolls around.
Record and Keep Track of Deadlines
Tax deadlines vary for businesses as opposed to individuals, and there may be other deadlines that you have to rigidly follow to ensure that you comply with any tax laws or regulatory requirements. Keep tabs on all upcoming deadlines for tax compliance initiatives, and make sure that these deadlines are readily available and acknowledged so that your business isn’t subjected to possible financial or legal penalties.
Enlist a Tax Compliance Expert at Waters Hardy
The best thing a business can do to ensure tax compliance now and decades from now is to have a resource like Waters Hardy that can guide the way. Whether you want a check-up on your financial health now or a partner that can save time and money for the indefinite future, we can help.
Reach out to us today to start the conversation and discover how having an expert like Water Hardy can provide perpetual peace of mind when it comes to tax compliance now and well into the future.