Now that tax season has arrived, your business must address several common risks. Protect your company now and into the future when you take several steps.
The W-2 forms you supply to employees contain personal information a thief can use to steal an employee’s identity. Safeguard all the W-2s you provide by handing these forms directly to each employee or letting your team know when to expect the forms in the mail.
Additionally, counsel payroll personnel to protect W-2 details. Thieves may contact the payroll department and ask for a list of employees and their W-2 information. If someone in your company releases this information, you could be liable.
If you do discover that someone has tried to scam your business and fraudulently gain W-2 information, contact the IRS immediately.
Verify IRS Requests
Thieves may send you an email with an official-looking IRS seal. The email may promise a refund or require additional personal information and include an attachment you must open and complete. Typically, these emails and their attachments comprise a phishing scam that’s designed to deliver harmful software, malware or spam to your electronic devices.
In the stress of tax season, you or one of your employees may open these emails, but remember that the IRS will not communicate with you via an email. Feel free to contact the IRS and verify the legitimacy of any communication.
Discuss the Security of Your Accountant’s Records
Despite your best security efforts, your accountant may not employ protective measures. Discuss the steps your accountant takes to secure your information, including the data you share via email and the tax returns and information they submit electronically to the IRS on your behalf.
File Taxes on Time
Your business faces penalties and fines if you file your tax return late. File for an extension if you need additional time to compile your data and file your taxes.
Report all Income
Forget to report income, and you could face a 20 percent fine. Intentional underreporting of income could land you a fine of up to 75 percent of the total tax owed. Proper recordkeeping prevents this mistake and saves you money in the long run.
Take the Correct Deductions
Your business is eligible for numerous business deductions, including commercial insurance premiums, office supplies and travel. However, ensure the accuracy of your deductions. Auto, home office and entertainment deductions can trigger an audit, so double check that you only take legitimate deductions for ordinary and necessary business expenses.
This year, you can avoid several small business tax season risks. Follow these tips and talk to your accountant as you meet your tax obligations and protect your company.