Small Business Year End Reminders
As we say farewell to 2017, we hope you’ve had a good year and look forward to a successful 2018. Take note of some important year-end information below:
December 31 – For Cash Basis taxpayers Year End bonuses to corporate owners must be paid to be deductible; simply accruing them is not acceptable.
December 31 – Accrual basis taxpayers must prepare accounts receivable, accounts payable listings and accrue Year End bonuses to corporate owners that will be paid prior to March 15 to be deductible
December 31 – Physical inventory should be taken to accurately reflect cost of goods sold expenses.
December 31 – Cash basis taxpayers must pay all expenses for them to be deductible in 2017. In addition, they should also try to defer cash receipts into 2018 if at all possible.
January 16 – Fourth quarter Federal individual income tax estimate is due.
Personal Use of Company Auto
For corporations, the value of any personal use of a company vehicle, by both owners and non-owner employees must either be reimbursed to the Company or considered part of the employee’s wages. This “bonus” paycheck must be issued by December 31, 2017, and appropriate taxes withheld. We suggest that the amount to be calculated based on personal mileage through November 30, 2017 (this is acceptable to the IRS).
Upon request, we will provide you the form you will need to fill out for each auto and return to us. Your bookkeeper/accountant will then calculate the amount of gross wages to be shown on the W-2 for personal use of a Company vehicle.
If you use another payroll processing service other than Kanter & Associates, P.A., these amounts must be included in your regular payroll run or you will incur an extra payroll processing fee from them.
Owner’s Health and Life Insurance
“S” Corporations – Your bookkeeper/accountant needs the amounts paid for health, disability or life insurance for any two percent or greater owner by December 15, 2017 as these amounts must also be included on the W-2 as compensation. If your company provides group term life insurance over $50,000 to your employees, please inform us.
W-2 and 1099 Data
The IRS will assess up to a $260.00 penalty per form that has missing or incorrect information. Therefore, you need to contact your bookkeeper prior to year end for any employee address changes. In addition, your bookkeeper will contact you if we are missing social security numbers or addresses for employees or subcontractors. You must issue subcontractors/lawyers a 1099 if you paid $600.00 or more during the calendar year.
NOTE – The IRS requires all Lawyers regardless of their business form must receive a 1099. Please supply us with the name, address and I.D. number of all Lawyers you paid during 2017.
Fixed Asset Purchases and Disposals
Businesses can elect to expense up to $500,000 of the cost of depreciable personal property purchased this year. If you are considering a fixed asset purchase in the near future, you may wish to accelerate the purchase into 2017 rather than waiting until 2018.
Your bookkeeper / accountant will need a complete list of all fixed assets purchased greater than $2,500 per item or disposed of during 2017, so now is a good time to gather that information.
For Fixed Asset Additions – Description, Cost, Placed in service date, and Location.
For Fixed Asset Disposals – Description, Cost, Disposal Date, Placed in Service Date, Sales Price, Disposal Method (Sold, Traded-in, Removed from service), and Location where the asset was used.
NOTE – Vehicles are limited for this fast write off election.
The rate for mileage reimbursement to employees for employment connected business mileage is 53.5 cents per mile.
Incorporating Your Business
If you are a sole proprietor or partnership, there may be tax savings available to you if you incorporate your business. If you have an interest in this avenue, please call our firm for additional information tailored to your needs.
If you have any questions or to schedule your year end appointment, please call our office at 813-855-5433.
We are looking forward to hearing from you!