organizing your online sales finances for taxes

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organizing your online sales finances for taxes

Running an online sales business has opened a lot of doors for my family. It has provided us with the additional income that we needed to get through some hard times. My wife has been taking care of this business from the beginning and has done quite well with it. The one thing that she overlooked was the bookkeeping aspect of it. She has done her best to hold onto receipts and track spending, but she didn't do very well putting it all into a spread sheet for tax season. If this is something that you are experiencing, this blog can help you reclaim the organization you need to optimize your finances for tax season.

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A growing list of workers is usually a sign that business is doing rather well. However, along with an ever-increasing list of people to pay comes the responsibility of doing payroll regularly. This may be something you do alone, but if you go that route, these payroll details are essential.

Know the Laws

As tax and employment laws change, it's imperative that you stay aware of them so you can adjust payroll accordingly. Mistakes stemming from ignorance of the law only leads to pushback from employees noticing problems with their checks and/or fines that are levied against you because you've made those errors. If your business activities prevent you from having current knowledge of laws that affect your payroll, contracting this work out to a payroll services company may be best.

Classify Workers Properly

It's important that you are able to differentiate between the freelancers who perform tasks for the business and employees who are always on the clock. This is because there are payroll implications for both kinds of workers. The IRS has laid out some details about how to tell the difference between employees and contractors. Referring to their documents is vital. Employees are always on call according to an arrangement that you've laid out. If you expect to see someone at their desk Monday through Friday and dictate how time is spent in the office for their ongoing work, you likely have employees. However, if you receive a report from someone periodically and don't know much about their workday or the hours they're working, they could be freelance contractors.

Keep Good Records for Former Employees

Regulations, both federal and state, will generally require that you keep relevant payroll records for all your employees, even past ones. Varying periods of time must pass before you can destroy those records. This sometimes depends on your state. For this reason, be sure to hang onto your records. 

Update Records Periodically

Small errors like misspelling employee names or ignoring address changes can cause confusion. Ensure that you and workers are always updating records. In fact, you might prompt everyone to look at and update their information periodically so that it is always accurate and current. This will benefit both workers and the company.

Knowing and getting used to payroll issues that arise is important for all business owners. If help is obviously needed, local payroll services such as The Callen Accounting Group, PLLC can step in and assist you.