10 Tax Time Tips for Your Fitness Business
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Tax day (April 18th this year) has come and gone... and now's a great time to start the prep work for filing your business taxes for next year. As with all other aspects of your business, organization, proper planning and consistency are hugely important in making tax season as painless as possible.
Read the 10 Tips that follow to ensure that next year's filing is smooth sailing:
- 1. Prepare early. Not surprisingly, this ranks top on our list. Procrastination will not serve you well when it comes to ensuring the documentation needed for your taxes are in order. Late filings and amendments can cost time and money. When you fail to file a Form 1120 (due March 15th for corporations and April 15th for LLCs), the corporation is charged a monthly penalty that's equal to 5% of any income tax that remains unpaid. In addition to the penalties for failing to file, the IRS can charge the corporation a separate penalty for paying taxes after the filing deadline. This penalty will increase the amount of tax that the corporation owes by .5% for each month it remains unpaid.
- 2. Be consistent. Ensure that your accounting and bookkeeping practices are accurate and occurring on a schedule. Make sure your expenses are reconciled, tracked and supported with receipts. At a minimum, spend time at least monthly to review your accounts: receivable, payable, credit card transactions, cash flow, etc. You also want to ensure that all expenses and revenues are booked according to the same system each month. Keep a depreciation schedule for all major asset purchases. Make sure the schedule includes: date put into service, original cost, accumulated depreciation up to this tax year, business use percentage (if applicable) and recovery period of the asset. You'll also need any Section 170 Expense taken in the first year of service.
- 3. Make sure you have W-9s on file. If you're paying anyone as an independent contractor and their total payment exceeds $600 (or the payment is for legal services), you'll need to provide them with form 1099-MISC by January 31st.
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