In our first blog of the current tax season, “1099, 1099-K, and W-9: What You Need to Know,” we briefly touched upon the value of keeping detailed records for tax purposes. This is especially important as a small business owner, along with enlisting the assistance of an experienced, certified tax accountant come tax season. Today, let’s delve deeper into the importance of keeping records as a small business.
Running a Business Requires Detailed Records
In regard to business taxes, The Internal Revenue Service (IRS) states that, “When you have employees, you as the employer have certain employment tax responsibilities that you must pay and forms you must file.” For example, “If you made a payment during the calendar year as a small business or self-employed (individual), you are most likely required to file an information return to the IRS,” also known as a 1099, per the IRS.
Small business owners should keep employment tax records, including all W-9 and 1099 forms, “for at least 4 years after the date that the tax becomes due or is paid, whichever is later.” as recommended by the IRS. Legal Zoom also recommends keeping copies of any contracts, letters on business stationery, business cards, brochures, or advertisements when hiring independent contractors, as well as receipts and any submitted invoices.
The Benefits of Keeping Detailed Records
The benefits of keeping detailed records as a small business owner are many and include streamlining the tax prep process, speeding up the auditing process, when needed, and making businesses more appealing for bank loans. Keeping detailed records also provides “a real-time overview of finances and a foundation for growth,” according to Indeed. This allows businesses to have “the resources on hand to make educated decisions for the future of their company.”
What to Do if You Need Help
Indeed also points out that, “Bookkeeping helps businesses stay financially organized and prepared.” While large corporations typically have their own in-house accounting departments, small business owners can enlist the help of a certified accountant to accurately prepare taxes and find ways to keep organized financial records for tax purposes, including important forms and tax documents, receipts, and other business transactions.
Locally owned and operated in the Greater Philadelphia area, Drake Tax Services has been going above and beyond for our clients for over 30 years! We offer secure tax preparation services for individuals and small businesses, and we are happy to assist with a proven process for keeping accurate and organized financial records for tax purposes. We also offer easy and secure uploading of any necessary forms when preparing taxes with us. We invite you to visit our website to learn more, or click here to book an appointment today.
Drake Tax Services has been serving the Greater Philadelphia area since 1997. Its founder, Anthony F. Drake, is a professional accountant and IRS approved tax preparer who specializes in local, state and federal tax returns for both individuals and small businesses.
