2014 Year End Considerations for Your Business
With the end of the calendar year approaching, we would like to remind you of some of the year end procedures that your company should consider. While not all of these issues are directly relevant for your company, they should be reviewed in order to determine their usefulness to your company’s needs.
1. 1099 Requirements – The first issue to consider is whether or not your company is required to prepare 1099 Forms for vendors and service providers that you have paid in 2014. Please refer to the general requirements for Form 1099/1096 reporting, to determine the circumstances under which your company would need to file these reports. We also want to provide you with access to the IRS website, where you can access the 2014 Form 1099, and instructions, as well as the related W-9 form.
2. Annual Company Meeting – If your company is incorporated (either C or S corporation) the officers and shareholders are required to hold at least one annual meeting in order to determine matters that are essential to the management and operations of the company. Please refer to your company’s articles of incorporation and bylaws, or consult with your company’s attorney to determine the annual meeting requirements for your company. Limited Liability Companies (LLC’s) are not required to hold annual meetings, however this practice is recommended to clarify company policies, and make changes in operational matters. In order to provide you with some guidance with respect to relevant issue, please look at some example topics to be considered for your company’s annual meeting.
3. Record Retention – The minimum required period for retaining financial records is 3 years, which is the standard statute of limitations look back period, which the IRS and other tax authorities enforce. However, our office recommends a 7 year archiving of relevant tax and accounting supporting information, in order to make certain that any prior year issue can be resolved, with the proper factual financial and employment data. Please refer to our website for more specific record retention guidelines.
4. Re-seller’s Permit – Effective January 1, 2010, the resale certificate was replaced with a re-seller’s permit, issued by the Department of Revenue. The re-seller permit can be applied for with the Department of Revenue, in order to allow your business to make wholesale purchases, including qualified contractors. The permits allow businesses to purchase items or services for resale, without paying retail sales taxes. However if your purchases are subject to sales taxes, typically for items used by your company, but were not paid at source, remember that you are required to pay use taxes, at the time you file your combined excise tax report with the State of WA’s Department of Revenue.
5. Retirement Benefits – If you haven’t already, remember to consider establishing an employee benefit type of plan, in which the employees, as well as the owners/officers of the company can all receive benefits. You may want to consider establishing a retirement type of plan, such as a SIMPLE IRA plan, which allows employees to defer a portion of their wages, along with a relatively modest company match, as a means to deferring taxable income of the employee as well as allowing a deductible, non-payroll taxable form of compensating your employees. Please refer to our Summary of Retirement Plan Options.
6. Health Savings Plan – Another consideration is to set up a health saving account (HSA) plan, which when combined with a lower premium cost “high deductible” type of medical insurance plan, allows the employees of the company, as well as the company, at the discretion of the ownership, to contribute toward a medical savings account, which can be either used by the employee during the year of contribution, or else carried over indefinitely for future medical costs, and/or eventually as a retirement type of fund, similar to an Individual Retirement Account (IRA).
7. Medical Insurance Premiums – If your business is an S corporation, remember that the medical insurance premiums paid out on behalf of the shareholders must be reported along with wages on Form W-2. The premiums can still be paid out by the S corporation on behalf of the shareholders, however the total premiums must be included as part of the shareholder’s wages, tips, other compensation, and also on lines 3 and 5, subject to Social Security and Medicare taxes. The amount of premiums paid should also be reported on Line 14, as a separately reported line item, so that the nature and amount of the payments is clearly stated. Please note that this reporting requirement, as per IRS Notice 2008-1, does not change the fact that these medical insurance premiums are deductible by the shareholder when paid.
8. Written Consent for Copies of Tax Returns – Federal law requires that in order to directly provide 3rd party users (e.g. bankers, lenders, insurance agents, etc.) with a copy of your tax return, or with information from your tax return, we must obtain a written consent form from you prior to the release of this information.
9. Affordable Care Act – Given the implementation of the ACA (Affordable Care Act), we understand that as a company owner, you, as well as your employees, may have specific concerns or questions regarding various compliance aspects of the law, so please don’t hesitate to contact us if you’d like to discuss how the changes may impact you and your company.
10. We are here to help! – As the year winds down and you complete your company’s accounting procedures, such as the counting of your company’s year end inventory, and the reconciling of your company’s annual accounting, please let us know if you have any specific questions and/or concerns that we can assist you with – we are here to help!
Posted Dec. 23, 2014/wittenbergcpa.com