Small Business Owners’ January 2014 Tax Checklist

It’s the new year, which means it’s out with the old and in with the new, and this philosophy should come into play when it comes to your tax record keeping tactics.

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Keeping your tax documents organized is a challenge, but it can not only make the tax filing season go smoothly, it can also reduce your company’s tax liability. Here are some tips to keep your business on track this month:

Storage. Old files must be stored away and new ones created to handle current year transactions. Think and organize with the idea that you will be audited. You will want to store files and receipts that pertain to items listed on your income tax return. So with your regular banking, vendor, and customer files include the following:

  1. Your appointment book. The meetings and other business events listed therein will prove material participation. Also, this document supports vehicle use. List your beginning and ending odometer readings for the year in order to answer the IRS question regarding total mileage driven as well as total business miles driven.
  2. Print outs of financial statements. First, be sure that all accounts are reconciled and the books are ready to turn over to your tax pro for tax preparation purposes. Include a print out of the balance sheet and profit and loss as of Dec. 31, 2013. Also print out the general ledger for the entire year, which lists the contents of every expense category that you will deduct on your tax return and is necessary to reference in the event of an audit.

Be sure that you do not store away permanent files such as asset listings, loan agreements and insurance policies. All permanent files should remain in the office within easy reach. Estimated Tax Payments. On Jan. 15, if your business is a sole proprietorship, S Corporation, or partnership, you will likely be required to pay installment No.4 of your estimated tax payments for 2013. It must be postmarked that day for it to be considered on time. If during 2013 you earned wages and self-employment income in excess of $200,000 (single) or $250,000 (married filing joint), you will be subject to the 0.9% additional Medicare tax that was legislated beginning in 2013. Be sure to increase your estimated payment by this amount in order to remain in compliance. If your legal form is C corporation, check with your tax pro to determine the due date of your estimated tax payments.

Payroll. If your business subscribes to a payroll service, you are likely well taken care of as far as year-end reporting. But if you perform payroll services in house, there’s a lot of extra work in store for you or your bookkeeper.

In addition to normal quarterly filings, you are required to file Form 940 (FUTA tax) and Forms W2 by Jan. 31 as well as any state reporting requirements. Review the W2s carefully. Reconcile the grand total of W2 wages with what is shown on your general ledger. Be sure the numbers match for each employee before mailing the W2s. Also confirm the social security numbers and mailing addresses of each employee.

Forms 1099. Also due by Jan. 31 are Forms 1099 to recipients who provided more than $600 in services or rents. If you are using a software program such as QuickBooks, the program will generate the completed forms for you. You only need pick up blank forms at the office supply store. Blank forms are also available at

You can run a 1099 report to see which payees are in need of the form. Normally, a business entity that is incorporated is exempt from receiving the form. Remember though that several years ago the IRS began requiring that incorporated attorneys receive 1099 forms. Be sure that each payee has a Social Security number or federal ID number listed on the 1099 form and that the number matches the name.

In other words, if you are issuing a 1099 to Suzie Jones who owns Decked Out Deck Renovation and all you have is her social security number, make sure the first line of the address block on the 1099 form indicates Suzie Jones rather than her company name. Otherwise, you will receive a letter from the IRS stating there is a mismatch between the social security number and the recipient’s name.