This goes for all your 2011 and 2012 tax, accounting and bookkeeping work as well.
Now is the time to meet with your tax accountant, if you haven’t already, to calculate your tax estimate for 2011 so you can avoid penalties and interest for not paying your tax on time. Remember, for self-employed individuals and partners or shareholders who receive K-1 income, January 17th is the due date for your 4th and final 2011 estimated tax payment (Form 1040-ES). In addition, good planning now will help you avoid a big tax bill surprise in April regardless of whether you are self-employed or not.
Also, be sure when finalizing your bookkeeping for 2011 that you include any business mileage driven for the year. Remember commuting mileage from your home to your work place is not deductible business mileage unless you have a home office that is your primary place of business. I have found the easiest way to accumulate mileage information is by including deductible mileage on my calendar throughout the year. This method serves two purposes, first, to assist in the end of year calculation (it’s easier if you keep up with it while you are thinking about it or scheduling appointments), and second, to have documented support of your mileage if audited.
The IRS standard business mileage rates for 2011 were 51 cents per mile from January 1 to June 30, 2011 and 55.5 cents per mile from July 1 to December 31, 2011 (note, these same rates have been extended for 2012). Other mileage that is potentially deductible includes charitable miles driven, medical mileage and if you have moved 50 miles or more for a new job. Please consult your tax advisor and/or www.irs.gov for additional mileage rates and eligibility information.
Mark your calendars now for these important 2012 Tax Deadlines!
- Tuesday, January 17th Final Estimated Tax Payment for 2011 due for self-employed individuals and partners or shareholders who receive K-1 income (IRS Form 1040-ES).
- Tuesday, January 31st Form W-2s for all employees and Form 1099′s for non-corporate service providers paid $600 or more in 2011 need to be postmarked today. And, NEW for 2011, if you own rental property and paid non-corporate service providers $600 or more in 2011, you are now responsible for filing Form 1099s (this includes contractors, plumbing repairs, landscaping, cleaning services, etc.).
- Thursday, March 15th 2011 corporate tax returns are due.
- Monday, April 2nd 1st Quarter 2012 payroll tax reports are due.
- Monday, April 16th 2011 individual and partnership tax returns are due.
Finally, start now to get a good financial system in place for 2012. If you are not already, I recommend that you start with keeping track of your finances on a monthly basis, preferably using an accounting software system such as QuickBooks or Quicken. Once you have perfected a monthly accounting system, then add your spending plan (alternatively, your “budget” which sounds restrictive, doesn’t it? thus my preference in using the words “spending plan”). And, finally, review your actual results to your spending plan each month to see what you have accomplished. This is also the time to make updates and/or corrective actions for future months, if necessary.
Also, if all this advice is overwhelming and you regularly procrastinate with your finances, you need help! And, please don’t beat yourself up because you definitely are not alone, I see it all the time in my accounting practice. The difference is that the people who succeed in the long run, make small steps on a regular basis to improve their financial systems and ultimately their financial situation.
So, if that means hiring an accountant, a bookkeeper or a virtual assistant to help keep you on track, then do it! This is the year to be proactive and get ahead of the game regardless of 2011 or years prior! And remember, there is absolutely nothing wrong in asking for help!
Best wishes for a successful and prosperous new year!