Hi … my name is Megan and I’m guest blogging for Diane this week while she’s off doing great things with some kids down in Juarez, Mexico. She’ll be back around September 16th.
In my business, I prepare a fair amount of IRS forms and come in contact with the IRS on behalf of clients quite frequently.
I’m always happy to share little nuggets of information that IRS examiners and agents pass along to me, as well as tips and tricks I’ve picked up over the years regarding business operations. Here’s a couple of things I wanted to share:
File a Form 941 Payroll Tax Report each quarter, even if you didn’t pay any salaries or remit any payroll taxes.
Early in my business’s life I used to pay myself distributions for one fiscal quarter, and then pay myself a salary the following quarter, and so on. As an S Corporation owner, I was working on the 50-50 principle (50% salary, 50% profit distributions) so I figured this payment method would equal fewer checks, less paperwork and fewer IRS filings.
I was wrong! When speaking with an IRS agent one day about something different, she asked me about the 941 gaps in my business’s file – only 2 per year instead of the 4 that should normally be there. I told her what I had done, and she advised me to file zero returns for the quarters that I was taking distributions only so my record had no gaps. Why? Well, it seems those sequence gaps can draw the IRS’s attention … and given that the IRS is currently targeting S Corporations for increased audit review … that may not necessarily be the attention we want!
Check out FileTaxes.com.
I came across this handy web site a couple of years ago and I love it. At Filetaxes.com, you can prepare all of your 1099 and W-2 forms online each year for a low fee, and then:
(a) have the forms mailed to your various employees and independent contractors, and
(b) have Filetaxes.com complete and remit your IRS confirmation filing.
I like it because it’s easy, remembers the previous year’s information, and integrates with QuickBooks, saving me time. It saves me more time by not having to go out and buy W-2 and 1099 forms, load them up into my printer, fix the inevitable printer jams, and so on, and it takes care of even the mailing for me.
You can also e-file your Forms 941 and 944 (that’s the one to report your Unemployment Insurance contributions) through Filetaxes.com, as long as you have applied for your Electronic Filer Identification Number. If you don’t have an EFIN, you can apply for one directly on the FileTaxes.com site.