As the year draws to a close, small business owners have a lot on their plates, from tying up loose ends to setting up new plans for the upcoming year. One critical aspect of closing out the year is ensuring you’re ready to meet all compliance reporting requirements. Staying organized and informed can save time and protect your business from potential fines and penalties. Here’s an overview of what’s due by January 31, 2025, and tips for making sure your year-end reporting goes smoothly.
1. Form 1099-NEC
The 1099-NEC (Nonemployee Compensation) form must be filed for any contractor to whom you’ve paid $600 or more over the year. This is often required for freelancers, vendors, and independent contractors providing services to your business.
What’s Required:
Provide a copy of the 1099-NEC to each contractor by January 31, 2025.
Submit a copy to the IRS by the same deadline, either electronically or by mail.
To streamline this process, ensure you’ve kept W-9 forms from each contractor on file to verify their Tax Identification Number (TIN) and address.
2. Form 1099-MISC
The 1099-MISC is used for various types of income, such as rent payments, prizes, and awards. If you’ve made certain types of miscellaneous payments exceeding $600, you may need to issue this form.
What’s Required:
Send a copy of the 1099-MISC to each applicable recipient by January 31, 2025.
File with the IRS electronically or by mail by the same date.
Common examples include rent paid for office space or royalties to an individual or business.
3. Beneficial Ownership Information (BOI) Reporting
New for many businesses, the BOI report is required by the Financial Crimes Enforcement Network (FinCEN) to help increase transparency around ownership.
What’s Required:
Identify and report individuals with at least 25% ownership or control in your company.
File BOI reports to FinCEN as soon as possible to avoid penalties, keeping in mind that this information is confidential and meant to combat fraud and illegal financial activities.
Ensure you have accurate records on all owners and controllers of your business to avoid reporting errors and delays.
4. Payroll Reports and W-2s
If you have employees, payroll reporting is essential for compliance and ensuring employees receive accurate information for their own tax filings.
What’s Required:
File W-2 forms with the Social Security Administration (SSA) by January 31, 2025.
Provide employees with their W-2 forms by the same deadline.
If you use a payroll provider, they often handle much of this process, but you’re ultimately responsible for ensuring accuracy and timely filing.
5. Sales Tax Reporting
If your business collects sales tax, you’ll need to file year-end reports and potentially make payments to your state or local tax authority. Requirements and deadlines vary by location, so check with your local tax authority for specific rules.
What’s Required:
Report total sales and tax collected for the year.
File and pay any outstanding sales tax by your state’s deadline.
This is essential to avoid penalties and ensure you remain compliant with local regulations.
Tips for Staying on Top of Year-End Compliance Reporting
Organize Records Early – Review vendor and payroll records early in the quarter to ensure accuracy, which can help you identify any potential
discrepancies ahead of time.
Use Accounting Software – Digital solutions like QuickBooks or Xero can help automate reports and keep everything in one place, making it easier to access the information you need when preparing year-end forms.
Schedule a Year-End Compliance Check-Up – Consider meeting with a tax professional to review your compliance obligations. They can offer guidance on best practices for each form and provide peace of mind that you’re on the right track.
Set Reminders for Key Deadlines – Many forms and filings are due on January 31, so setting reminders for this date ensures nothing slips through the cracks.
Keep Communication Open with Contractors and Employees – Ensure all contact information for your contractors and employees is up-to-date to avoid delays in delivering forms and ensuring compliance.
Staying proactive about year-end reporting can save time, minimize errors, and prevent penalties. By understanding your obligations and keeping accurate records, you’ll be able to tackle these compliance tasks confidently and keep your business running smoothly into 2025.
If you need help getting ready for year-end, we’re here to support you. Schedule a consultation, and let’s make sure your compliance reporting is seamless this season!
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