KriyaGo - Blog #tax filings

Top 10 Tips On How SMEs Can Better Their Tax Filing in 2022

Mon, 15 Aug 2022 09:00:00 -0400

Since the onset of the pandemic, the Internal Revenue Service (IRS) has come up with multiple new tax rules and regulations. Many of them are COVID-related and might affect your business and its tax system. There have been some exemptions, some tax reliefs, and more. The system is fast-changing, but not keeping up with any of it is not an option, or it can lead to penalties and legal issues.

Businesses need to take notice of these changing tax guidelines and plan their filing system. Read the full blog to know some insider tips on how SMEs can improve their tax filing system this season.

Proper Tax Filing can be a Major Revenue Saver for SMEs

As a small and medium business owner, you need to understand multiple tax needs. There are federal, local, and state tax requirements for a business. If you are able to plan and file your taxes on time and do it well, you can save yourself money and hassle. There are the basic COVID reliefs, there are also Energy Tax incentives, and also federal tax deductions for charitable donations by small businesses. You need to understand if you are eligible for any of these and reap its benefits.

10 Tips to Better Your Tax Filing

Filing taxes are the most critical, tiring, yet inevitable job of a business owner. Here are some industry insider tips to make your tax filing season a little less stressful.

1. Hire an expert accountant

Hiring an expert accountant to get advice and do the work for you is the best way forward. Many people think they can simply figure out their own way around taxes without outside help. But there are many pitfalls in the fine-printed rules and regulations of the IRS, and your lack of expertise might land you in one of these. Since you are a small business, it would be cheaper for you to getoutsourced accounting services. That way, you do not need to hire and pay accountants full-time.

2. Don't miss out on any income filed to IRS

The IRS gets every copy of the 1099-MISC forms you receive so that they can keep track. Do make sure that the income you report to the IRS matches with the income reported from the 1099-MISC forms you received. Any discrepancy will lead to a background check on you with IRS.

3. Keep paper trails and records

Keeping track of your accounts, proper accounts reconciliation, and bank records is extremely important to filing tax returns. If you do not keep track of your expenses and payroll, you are setting up your business for an audit and bigger problems.

4. Track the difference between net and gross income

As a small business owner, the difference between net and gross income can make a humongous difference. The total money you make after deducting production costs is your gross income, but if you deduct regular expenses from it, that is your net income. You need to keep track of these while filing your taxes.

5. Classify your business

There are multiple categories of businesses, and all of them have different tax regulations. You need to register your company in the correct category like LLC, Sole Proprietor, Partnership, Corporation; there can be many options. You need expert advice from your legal attorney and accountant before you classify your business.

6. Ask your accountant for a budgeting and forecasting plan

A proper budgeting and forecasting plan can help a business map its future much better. You can understand how much you can put into employee pension funds, how much money you have in hand, how much bonus you can offer, etc. A good accountant is sure to help you with all of it and help you understand the scope of growth for your business in the immediate future.

7. Be aware of tax deadlines and penalties

Do not keep document accumulation and tax filing work for the last date. The IRS’s late tax filing and late payment penalties are huge and will drain you of funds. The basic penalty is 5% of the unpaid taxes, and it adds up every month, starting from the last tax due date. This percentage can go up to 25%, depending on how late you are in filing it.

8. Stop spending time on excel sheets

No matter what the size of your business, it is never enough to keep track of your business transactions on excel sheets. They can be jumbled up and extremely confusing. You need a proper ERP software integration for your business to automate your daily functioning and tracking of finances. These systems are auto-updated, and reporting and documentation are done with ease and will leave you enough time to focus on other important matters.

9. Separate business and personal accounts

When the IRS comes down for an audit of your business and gets any hint of your personal transactions and business transactions overlapping, they will charge you. Even if you filed your taxes correctly, mixing accounts and credit cards will raise a lot of red flags with the government and get you under their radar.

10. Manage payroll

The IRS checks up on business on a quarterly basis to ensure payroll taxes are all filed on time. But managing payroll is a very detailed task. Hiring an external firm to manage the payroll for you can be a great start to making the process seamless. It will release all payments on time and also help keep up with all the tax filing rules and keep a clean track record for your business.

Summing Up

Tax season is a nightmare for most SMEs because it takes up most of their time and engages their workforce in boring office work. But it is unavoidable; it is better to shift this work to expert back office accountants and solve the problem with ease.

The KriyaGo team is here to get the tax filing work done for you with the help of our experienced accountants at work. We also use the latest software to streamline your work and get the job done in no time. No more breaking sweat over filing taxes on time. Give us a call today to book our services.

7 Most Common Real Estate Accounting Mistakes to Avoid

Fri, 05 Aug 2022 09:00:00 -0400

The real estate business is tricky and volatile, to say the least, if you add bad accounting particles to this mix, then it gets even more complicated. It can end up costing you millions and also cost you your reputation as an authentic real estate business.

Accounting and back office are not the first things that real estate property managers think about. It is almost like an afterthought for most. But part of knowing the insides of your business lies in accounting. Why? Simply because accounting forms the backbone of your real estate business. From payments, cash flow, basic finances, budgeting, everything depends on your accounts. Though this might be uninteresting work, it can make or break your business, to say the least.

7 common mistakes to avoid in real estate accounting

You need to start from scratch when it comes to accounting. You need to get a better understanding of accounting in general and the specific accounting needs of your system.

There are an umpteen number of mistakes that businesses commit along the way. Though these are very gross mistakes and seem negligible to the naked eye, they make up a very faulty system. So, how do you not let accounting become a big issue? What signs should you look out for? Here are the most common mistakes that real estate businesses make in their accounting process. Read on to know in detail.

1. No proper data classification in departments

Classifying financial data in real estate can be tricky. From separating capital expenditure from normal maintenance and repair costs, there can be a lot at stake. Discrepancies in these data can also send wrong indications to auditors and tax departments. This is exactly why you need to clearly divide data based on departments and expenditure types.

It is also crucial that you back up these data in a cloud platform. Why? Studies say that more than 40 - 60% of small businesses close down permanently after a complete data loss. A real estate firm of any size deals in millions and has multiple stakeholders to answer to. If you lose crucial financial data you will set yourself up for bigger problems. So set up the safety net of cloud data backing to avoid this.

2. Incorrect financial record keeping

If you are a real estate project manager or business owner loans are essential for construction work. But if you do not have your financial records straightened out then no banks and financiers will disburse loans to you. It will eventually delay your work and affect the credibility of your business. It is in the best interest of your company to keep the financial records healthy to avoid such scenarios.

3. Disbursing funds before deliveries & services are finished

It is quite an informal but known practice where real estate agents release trust or escrow before official confirmation. You might be dealing in good faith with your long term clients and vendors by disbursing funds based on word of mouth. But it is also an open avenue to initiate fraudulent payments. If not that renegotiations can also take place at the last moment and the actual commissions may end up changing. This difference in amount may cause a problem during month-end book closing.

4. Not separating personal and business bank accounts

The real estate business has a sort of personal touch to it when there is client handling. Buying, selling, renting homes is bound to have that when real humans are involved. But some real estate managers end up mixing the personal and professional even in their accounts. It causes confusion and is financially unhealthy for all parties involved. This will only lead to jumbled up bookkeeping at the month-end. You will need to manually scavenge through your personal and business bank accounts to add up your transactions and close the books.

Separating the accounts will also save you from other audit liabilities, tax problems and legal issues.

5. Failing to keep up with tax filings

Filing taxes on time and following all regulations will benefit you by staying in the good books of the IRS. If you fail to keep up with these you will be liable to fines and penalties, eventually losing out on a lot of money.

6. Not having experienced accounting staff

When there are budget issues sometimes real estate companies use staff from other departments to do the accounting. But accounting is a highly skilled job. The overhead cost of having your own expert accounting team is expensive and can burn a hole in your pocket.

This is where KriyaGo’s outsourced bookkeeping services can help you. Our team of professional accountants can streamline the work and flag all discrepancies and close the books on time. More than 24% of small businesses get outsourced help to ease their work. You need to take inspiration from it and outsource your back office work to save more than 60% in costsand time.

7. Trying to track commissions separately

If you track and check commissions separately from other account works then you are simply doing the same data entry twice. You are wasting manpower and spending money on it. Multiple data entry only sets up your system for more human errors. You need to merge your commission tracking and accounting system. You can effortlessly track what is owed to which agent and also avoid all data overlap.

Final Thoughts

In the present world, there is enough technology out there to make accounting work easy for your real estate business. As a real estate property manager, you just need to know which works best for you. A good technology selection in property management and accounting can help in your growth.

The KriyaGo team of expert accountants and technology consultants can do that for you. Do not let the monotonous office work get to you. Our outsourced accounting services will get the tedious accounting work done for you. Our team of experts have been solving accounting problems for clients for years and have helped them save both money and labor. Book a consultation with us to know more about our services.