Avoid 4 Common Year-End Mistakes With Outsourced Accounting

Posted on December 8, 2015

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Why You Should Consider Outsourced Accounting as a Gift to Yourself

outsourced accountingThe year is drawing to a close, and every small business owner is busy compiling receipts, paperwork and payroll numbers to prepare for year-end. If this includes you, too, you might consider giving yourself a holiday gift for next year: outsourced accounting. When you do your own payroll and other accounting, you could be setting yourself up for costly mistakes. When you miss a deadline or make another mistake related to tax deposits and filings, you could pay a hefty penalty.

Here are four common costly year-end mistakes that you could avoid with outsourced accounting:

Flawed treatment of taxable gifts or rewards

At the end of the year, you report taxable business expenses like company property and life insurance. There are other items, however, that must be taxed more closely to the time that they were received. This includes rewards and gifts.

Not only are tangible holiday gifts or contest rewards won throughout the year placed in this category, but also points websites that allow points to be accumulated in an employee’s account for them to spend when they want. Once an employee spends those points, the reward is considered a taxable item and should be included on the payroll stub.

Not Keeping Up-to-Date With Legislation

Tax legislation is in constant flux, both at the state and federal levels, resulting in frequent changes to rates and forms during the year. You need to be sure that you have downloaded the latest version of tax forms. Many companies that use cloud- or Web-based payroll software will automatically have the latest versions through updates, but on-site software will not automatically have the latest forms.

Affordable Care Act

The guidelines for reporting health insurance at the end of the year have changed, becoming more complicated with the adoption of the Affordable Care Act. Don’t forget to include employee and employer portions of health insurance on the employee’s W-2 forms.

Incorrect Employee Information

For every person that works for you, you need to be sure that they are classified correctly as an employee or an independent contractor. Everyone that is paid by your company needs to have the proper tax filing form for their classification, whether it is a W-2 for employees or a 1099 for contractors. You also need to be sure that employees that are out-of-state may have state-specific filing rules and tax calculations that are different from your own state.

If you would like the peace of mind of knowing that your payroll is being accurately handled and efficiently processed, consider outsourced accounting as a gift to yourself for 2016. At AccuBiz, Bert Doerhoff, CPA offers small business owners the benefit of knowing all payroll deadlines are met and every item is properly processed. When you use AccuBiz for outsourced accounting, you gain not only payroll processing, but the guidance and expertise of a qualified accounting team. Call us today to set up an initial consultation. We look forward to meeting with you.

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