The difference between the fiscal year and calendar year requirements can get confusing. Businesses need to make a choice when to begin and end their reporting period. But what are the pros and cons for each? The calendar year can be an easier option simply because people are used to January 1 through December 31 as an annual cycle. However, including the sales numbers during the holiday season can give a company a boost in profits reported for the year—making the fiscal year more appealing. Consulting a tax professional in Chandler will help you sort out the options, as not everyone can choose between the two: Sole proprietors, for example, cannot opt to file taxes based on a fiscal year. In the meantime, here are some tips to sort it out:
Pros to Filing on a Fiscal Calendar
Starting your taxes on a date that best suits the needs of your business is the largest pro to filing fiscally. A business can opt for any start date. Many companies have seasonal highs and lows. If your high is during April and your largest expenses are during November then a calendar year would end while you are down. Your expenses, which are made up the following April, would be separated on a calendar year.
Another reason to choose a fiscal year is if you get kickstarter money toward the end of the year. This will be taxed as income and you may not have had time to purchase items for the project that could be tallied as expenses.
Choose a Fiscal Date Carefully
When you do file your first tax return, the date is fairly set from that point on. As it is difficult to change, it is important to get right. This can be a stressful decision for a new start up who many not know the way business will ebb and flow in years to come. Checking with a business consultant in Chandler is a good way to plan for the best date to start your fiscal year.
Of course there is the obvious reason why keeping up-to-date, accurate financial statements helps a business do well: Knowing where the business stands means knowing how to act on its behalf. Designating a person in-house or using a bookkeeping service in Chandler is a business imperative
Better Decision Making
Knowing where a company stands allows management to make smart, quick decisions. When an influx of business comes in, a company can decide on the best hiring option. Knowing what funds are available for purchasing and adding venders is nearly a real-time requirement in today’s fast changing market. Having financial records which are regularly updated will allow managers and financial planners to do their job efficiently and more to the companies benefit.
If You Sell
Just having regular, accurate statements available when a potential buyer reviews a business’s records will make a good impression from the start. A lack of financial statements or statements that are inconsistently kept give the appearance that the business is in a shabby state. Buyers will have to consider the fact that they will not have a complete picture of the company they are looking into purchasing. On the other hand, having profit and loss statements for each quarter allows a company to look appealing. Showing increasing profits as well as strong organization will instill a sense of security for the buyer. When it comes to verifying records, financial documentation already exist so an independent accounting consultant will take much less time reviewing and approving them.
Looking for Trends
Things change fast in the world of e-commerce. Everything from where you rank on a Google search to how many likes you have on social media significantly impacts business. Financial statements will show a company where trends lie. From there those financial trends can be compared to what efforts, ranking, or advertising has been done. It becomes easy to see what is working and what is not. Likewise, you can see what products or services are moving at what times, again improving better business decisions.
Payroll can be time consuming. Employees come up with questions you don’t have a quick answer for, causing you to make time to research the answer. Mistakes or missed punches create a hassle. Needing the ongoing time to process time cards while balancing the pressure of other management duties can easily become overwhelming. Having a payroll service in Chandler eases this important burden, freeing up managers and supervisors to focus on daily business.
1. Keeping up with Payroll Laws
When it comes to state and federal laws, there is a lot to know about payroll. Hours and rates of overtime, changes to tax withholdings and the like are often adjusted from year to year. Not keeping up could cause a company to have to pay penalties. Not having the right pay information could also create a situati
on where employees need to be compensated for backpay or where they have been overpaid. Either situation can become very unpleasant for the employees and the company. A payroll service has the knowledge and expertise to make sure this doesn’t happen.
2. Correct Tax Reports
Small businesses often payout hefty penalties for inaccurate or untimely taxes. Taking the time to accurately gather and report tax information to the IRS is a job in itself. Having a payroll service alleviates the need for a company to track and report this information. When it comes time to report taxes, you will have the information ready and be assured it is accurate.
3. Ongoing Support that Won’t Leave
Having a payroll service is like having a help-desk at the other end of the phone. You can call and get answers to payroll laws, specific hours an employee has worked, or how much payroll has has cost from one year compared to the previous year—just to name a few items. All this will continue to be available without ever giving two-week’s notice. Having someone in-house process your payroll and bookkeeping could mean not having access to this kind of information if that person leaves the company. With a payroll service these records will remain safe, year-after-year, with no worry about hiring and training a new person in hopes that he or she is able to get up to speed.