Tips for Getting Your W2s Ready

All businesses need to have the W2s in the hands of their employees by January 31, and are even required by law to get them out if you happen to be passed the filing date. Even though you technically don't have to send all of the tax information out until after the new year, starting to get your W2s ready now can really help start the first quarter in 2016 off right. Tax season is busy and it doesn't help that it coincides so close to the holidays when people take off and can easily get distracted. It can make for hectic times once you realize how close the deadline sneaks up on you. If you're a business owner, then you may want to avoid some of the headaches you had last year. Check out some of these tips to help you stay organized and get some of the work out of the way early.

1. Go Through Your Records

If you have a large company, then it's easy for things to slip through the cracks. Employees may start and quit, people take paid time off and unexpected leaves happen too. It's all easy to forget come tax season. Ensure that you've been keeping meticulous files, and if not, have someone track down all the forms you need to get the deductible status, address, social security number, etc of everyone. You can't guarantee that someone will receive their W2 (wrong forwarding addresses, mail problems, etc), but you will have to prove that you at least sent it out if there's a dispute. (Related Reading: Top Reasons Americans Struggle When Filing Their Taxes)

2. Know Your Employees

This is probably going to be the most tricky part of tax season, because you'll need to know how part-time, full-time, full-time with benefits and independent contractors will affect your filings. Typically, you'll set contractors up on W9s but every organization is different. It makes a huge difference for how the deductions are handled, and if there's a mistake made then come audit time, you may be in trouble.

3. Talk to Your Staff

It's not uncommon for people to try to game the system a little during tax time, so give a speech about how what they do also affects the company. If any of your workers accepted tips, used company funds for entertaining clients or did anything that doesn't seem to fall into the given categories, now is the time to give people a chance to talk about it and clarify. Before you prepare the forms and send them out, they may be able to bring these situations to your attention to avoid potential pitfalls.

4. Don't Forget About the Other Documents

Depending on how many employees you have, it can be a challenging enough task just to get the W2s out. However, you'll still need to give a lot more information to the government about your business. It's particularly easy to get something wrong here, and while the odds aren't likely that one small mistake will be a huge deal (it likely won't even be caught), there's no reason to take chances.

In the spirit of playing it safe, it really helps to have a certified accountant on your side through all this. Finances can get very messy quickly even for small companies that don't have many employees. Between all the ways a particular expenditure can be classified and all the extenuating circumstances that can be reported on just one form alone, it's extremely easy to get something wrong. Trusting someone else who knows the process and has been through it many times can really save your company a hassle later on. Not to mention all the time and energy it'll free up for you to focus on profitability for 2016.

What Every Small Business Needs to Know Before Filing Taxes in 2016

Making your list, checking it twice. The IRS will find out if you have been naughty or nice. What will your organization receive this tax season, a refund or a penalty? Soon after the festive holiday season, small businesses scramble to make last minute changes in order to comply to tax code changes and take advantage of deductions. Start to review broad stroke mistakes that small businesses should avoid and applicable tax code changes for 2016 today.

Common Mistakes to Avoid

It is far easier to prevent a costly mistake than having to engage in back and forth communications with the IRS to fix an error. Many small businesses fail to get organized for the yearly tax filing process. Consider the following suggestions on avoiding an oversight or miscalculation.

Organize important documents and hire a specialist to handle the paperwork.

• File online rather than mailing in tax forms.
• Double check employee information, such as social security numbers of employees and their dependents, and employee identification numbers.
• Reread returns for typos and miscalculations.
• Ensure that the IRS is aware of your current business address.
• Be aware of applicable tax deductions. Travel deductions, petty cash, educational trainings and more may be deducted. Keep track of the small stuff.
• Reconcile business expenses. Track and support expenses with receipts and review accounts weekly.
• Know how your business is defined and what tax code changes may apply. This becomes particularly important with changing health care requirements.
• Meet all employment tax responsibilities. See Employment Taxes for Small Business for more details.

Small businesses would be well advised to hire an employee benefits consultant, and reach out to a local or state chamber of commerce for additional help. Statistically, an estimated 40 percent of small businesses are penalized approximately $845 per year.

This Just In

Entrepreneur reports of challenging tax issues for small business owners in 2016. A disconcerting issue is that there are contradictory definitions of a small business within tax code rules that then forces them to comply with large business tax requirements. Employers will have to deal with new changes as they apply to the Affordable Care Act (ACA) and tax extenders.

·         Health care requirements extend to businesses with 51 to 99 employees from the prior year. Such organizations would now be considered to be large. The individual health-care coverage required by ADA results in an estimated $5,800 a year for businesses. This can easily impact small business bottom lines and narrow healthy profit margins. If small businesses fail to comply next year, they will incur a penalty. Businesses that are now newly mandated have until April 1^st to comply.

·         Business owners are also mandated to track payroll data such as hours worked and benefits. Such data must be reported to the IRS. Businesses that fail to comply can receive a penalty of $2,000 per employees, excepting the first 30. More data tracking requires additional time, software purchases and hires to help businesses comply.

·         Businesses are waiting for last minute tax extenders. Such may happen right before the holidays kick in, if the tax extender legislation signed into effect on December 19^th of last year is any measure. Organizations received over 50 tax-related credits and deductions spelled out in the $500,000 Section 179 deduction and 50 percent bonus depreciation. If an extension does not happen this year, the Section 179 deduction will be slashed to $25,000 and there will be no bonus depreciation. Such late date tactics make it difficult for organizations to plan ahead.

·         Small businesses are hit hard when it comes to business identity theft. Business owners are taken unaware and only find out that they have been a victim of identity theft when notices are received from the IRS or other agencies. Businesses must work to repair their reputation, correct financial issues and settle fears of staff and clients. Identity theft for small businesses has risen since criminals have found that they can receive higher refunds when posing as a business.

It is no wonder that as the year draws to a close, businesses large and small become overwhelmed as they attempt to accurately comply with all tax requirements. Take the time to triple check forms prior to submission to avoid any unnecessary headaches.

The Insider's Guide to Forensic Accounting and Investigation

How is Fraud Defined?

Fraud is a deception perpetrated for the intent of personal or financial gain: a lie told and acted upon for profit.

The law segregates fraud into four sections:

1. Misstatements and Omissions: misrepresentation of a fact

2. Scienter: an awareness that the misrepresentation exists; deliberate and willful disregard of the truth. 


3. Reliance: the person acting on the misrepresentation has relied on in. 

4. Damages: the victim has suffered financial damage due to the above three.

There are two kinds of fraud:

· Retail Fraud: misappropriation of merchandise, assets or money

·  Wholesale Fraud: fraud perpetrated through financial statements

To combat fraud, corporations and government have put safeguards in place on broad and local levels:

Legal Safeguards

· Standards set for the corporation

· Regulations in the market

· Utilization of evolving technologies

Local and In-House Safeguards

· Corporate board of directors

· Outside Auditors

· Specialized Analytics

· Legal professionals

Among the local and in-house safeguards, corporations employ the use of auditors and forensic investigators who are tasked with finding any misrepresentations, should they exist. For auditors, the task is more simple. They analyze data to ensure there are no discrepancies. In the event of a discrepancy, they generally do not investigate, but turn the information over to forensic accountants.

What is Forensic Accounting?

Forensic accounting, in its simplest form, is the use of accounting to analyze financial records and information for the investigation of possible embezzlement and fraud.

The Role of Forensic Accountants

Forensic accountant investigators will investigate thoroughly, following only the factual information gleaned from documentation and testimonies by all involved parties. It is the forensic accountants that determine the extent, if any, of loss or damage and make suggestions on avoidance and deterrence in the future. These suggestions can be utilized as testimony before government agencies as well as in litigation.

It has been said that the roles of auditors is like that of a policeman: someone that finds the problem and turns it over to one with more authority. Forensic accountants have been likened to detectives, the ones authorized to find the source of the fraud once a problem has been found.

Forensic accountants can be called on for use in multiple situations:

·         Economic losses within an organization

·         Fraud investigations into employee bases

·         Insurance claims and situations that interrupt the flow of business

·         Professional negligence

·         Disputes between shareholders and partnerships

·         Mediation and/or arbitration

In these situations, forensic accountants are called upon to examine and investigate. Upon concluding an investigation, they will put their findings into exhibits, reports and/or a collection of documents that display or illustrate the findings as proof of fraud. This is helpful in exposing any form of criminal activity and outlining how the fraud was perpetrated but it is also legal documentation that can be presented in court.

Corporations have used the services of forensic accountants to uncover criminal activities of embezzlement, fraud, money laundering and the concealment of debt and assets.

Once fraud is found, forensic accountants can be called upon as expert witnesses for testifying in court on civil or criminal litigation. They can also be called upon to appear for pretrial depositions, requiring a degree of education and knowledge of legal procedures and concepts.

Educational Requirements of a Forensic Accounting Investigator

This type of investigator requires having a master's degree in the business sciences or in accounting. They can also have a background in CPA, certified public accounting. They may also be required to have certification as a CFE, or certified fraud examiner.

Forensic accounting investigators can also obtain certification in Certified Financial Forensics, a certification that is recognized.

Meeting With a Forensic Accounting Investigator

For corporations that want or need the benefit that forensic accountants provide, the services of an accounting firm may be in order. An accounting firm can provide forensic accounting services, among others, such as tax preparation and business valuations.

These services have been utilized in saving corporations money, in the avoidance of fraud based activities within the firm and in helping corporations comply with state and federal regulations. Accounting firms have also been utilized in sparing corporations from legal repercussions by providing the means to find and eradicate fraud from within.

At the initial meeting, forensic accountants will interview clients:

·         To discern issues, problems and concerns

·         For separation of facts for investigative purposes

·         Identify involved parties and the issues that have arisen

·         Check for conflict and discrepancies among involved parties

·         Perform an initial investigation

·         Develop a plan of action.

The forensic accountants will uncover evidence of wrong-doing, perform an in-depth analysis and prepare their findings to report to the client. In some cases, investigations have led to finding and recovering stolen money and assets. In addition, the presence of forensic investigators has been known to deter further theft and fraud. In this way, the work of forensic accounting investigators has helped save money and assets that would have been unrecoverable otherwise.