The Green Sheet Online Edition
March 28, 2016 • Issue 16:03:02
Prepare now for tax season 2017
It's that time again. The brightness of the new year has waned, and we're all looking ahead toward the second quarter. Of course, it's also the time when tax day looms for those who haven't already filed.
If you have yet to file, this is the time to gather all the documentation needed to back up your residual income claims and deductible expenses. Soon, you will find out whether the estimated tax payments you made in 2015 will adequately cover the successful year you had.
If your business is growing, you might have hired employees or contracted with independent merchant level salespeople (MLSs) last year, which adds a layer of intricacy to your tax equation. If so, you know how complicated it can be to manage residual payouts and keep track of year-end reporting. Indeed, this is often the time when payment professionals decide to incorporate, and it's almost always the time when a CPA is brought into the picture.
"More profit means you'll need more assistance on how to best minimize your tax impact," said Lisa Rivera, an independent CPA with over 20 years of experience in dedicated support to payments industry ISOs and MLSs. "Card processing can be so lucrative that people often get caught with tax consequences before they realize they're coming."
Rivera recommends getting professional advice early on to mitigate your tax consequences before you have that breakout sales year.
The coming year
Vicki M. Daughdrill, Managing Member of Small Business Resources LLC, urges ISOs and MLSs to begin preparing for the next year's tax season right after you've filed your returns. In "Make tax season easier next year," (The Green Sheet, May 11, 2015, issue 15:05:01) she offered steps business owners can take immediately to ensure that filing taxes will go smoothly next year:
"Whether you prepared your tax return yourself or paid a professional tax preparer, it is important to know and thoroughly understand all of the components in your complete tax return," Daughdrill wrote. "While the tax code is complicated, most small business returns are not overly convoluted and can easily be understood.
"If you hired a tax professional, schedule an appointment to go over your return in depth so that you have a thorough understanding of what you submitted to the IRS. Ask questions. If you don't understand the answer, ask the question again. Understand what information was included in your income."
Daughdrill suggested asking the following about your 2015 return:
- Where were the figures for the income derived?
- Did you have income that was not taxable? If so, what kind and why?
- What deductions were allowed?
- What expenditures did not qualify for tax deductions?
- What deductions could you take if you had maintained the proper documentation?
- Are you maximizing your retirement contributions or is this an area where you can improve this year?"
CPAs specializing in payments have considerable knowledge to offer ISOs and MLSs, but whether you hire a professional or go it alone, don't put off laying the groundwork for tax season 2017.
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