Business owners don’t need another reminder about the importance of filing their taxes punctually for the proper functioning of your organization. It’s necessary to be aware of the state, federal, and global taxation regulations established by governments if you wish to operate your business effectively.
Since failure to pay what’s due often leads to monetary penalties! So, compliance regarding taxation involves two situations, i.e., voluntary or enforced. Voluntary compliance deals with a company dutifully paying its taxes, while enforced compliance refers to relevant authorities intervening coercively. Here, we’ll discuss some simple methods to ensure that your organization remains tax compliant voluntarily.
Tips to make your company tax compliant
How do you define tax compliance for individuals/organizations? It involves declaring your income and filing your taxes punctually. A recent report by the Washington Post revealed that over 50% of the USA’s most prominent corporations didn’t pay federal taxes in 2020. It can damage the reputation and tarnish the image of smaller companies especially! Also, privately-owned grassroots organizations and new startups are increasingly vulnerable to fines/penalties. So, we recommend them to do these:
1. Interpret the regulations:-
Many companies struggle with interpreting vague laws and poorly-defined regulations. There have been reports about how an average American finds such indistinct tax-related statutes helpful while filing their taxes. Some experts even propose that our tax code’s ambiguity lies on the verge of being unconstitutional. Though, for modern-day business companies, explaining these burdensome tax-related regulations isn’t problematic with experts at your disposal.
2. Consult a professional:-
So, you should consult a professional who can understand complex regulations and handle your tax-related complications. Today, many e-learning opportunities are available for students who wish to become taxation experts. They can obtain tax-related academic qualifications digitally by leveraging distance learning options. So, you should hire someone who has pursued an LLM taxation online for honing your organization’s compliance. It’ll make filing taxes easier and more efficient.
3. Use software solutions:-
Besides employing the services of taxation experts, don’t forget to utilize software solutions if you’re willing to improve your compliance. Several options are available for organizations with prices ranging from less than $1,000 to $2,000+, e.g., Tax Act and Ultra Tax. These digital solutions not only cut costs but also give peace of mind. Moreover, using these programs doesn’t require you to have previous experience. This technique helps you remain cost-effective but tax-compliant.
4. Create a new bank account:-
Experts recommend separating private assets from company-related finances for proper handling of your commercial requirements. Though business owners can legally operate their organizations via personal accounts, it’s suggested to create one solely for business purposes. It’ll enable your finance department to monitor income/expenses easily. Therefore, information will be more accessible to your employees when the time comes to calculate taxes for better compliance.
5. Do your homework:-
Don’t underestimate the importance of filing taxes in the 21st century. According to a Gallup survey, nearly 70% of Americans believe that corporations aren’t paying taxes properly. Also, with corporate social responsibility being significant, being tax non-compliant may damage the public perception of your organization. So, do your homework effectively while filing taxes. This homework includes obtaining your unique TIN (taxpayer identification number) from the IRS.
6. File your taxes punctually:-
You don’t wish to run afoul of the Internal Revenue Service by filing your taxes late. Being a business owner, you must comply with all the deadlines and ensure that your finance department does the same. Different forms have separate deadlines, such as W-2 and 1099 forms. Then we have C corps and S corps (forms 1120 and 1120S, respectively). Dates may change with the year or operate on a fiscal year different from the calendar year. So, be vigilant about filing taxes timely. Look for professional “business tax services for my business” to ensure everything is accurate.
7. Update your records:-
Business owners often face complications being tax compliant because their records are not up-to-date! They neglect to update these records and then attempt to fulfill their tax-related obligations in a hurry before the deadline expires. It leads to errors/mistakes that require lodging correct returns. So, review your records regularly by hiring the services of the right people. They include not merely an accountant but also a bookkeeper who can review these records every week/month.
8. Employment taxes:-
Most businesses still have traditional full-time employees. So, business owners should ascertain that they’re withholding taxes properly from these workers’ paychecks, e.g., Medicare and social security taxes. Improperly calculating these taxes may lead to an audit and related financial complications. A company that hires independent contractors must also monitor expenditures. If these payments are worth more than $600, your organization must report them using a Form 1099.
Conclusion
Modern-day companies encounter myriads of compliance issues regarding taxation. These problems are caused by several reasons, including the rapidly-changing nature of tax-related regulations. In the United States, individuals and organizations are both required to contribute to the government financially.
Also – in case of non-compliance – the culprit receives penalties ranging from payments to incarceration. So, a person can be jailed for three to five years if they have evaded paying taxes. How can an organization ensure being tax compliant? It involves using software solutions to calculate your taxes, hiring experts to do your finances, and paying these dues on time. These tricks keep the IRS pleased with you!
