Keeping tax records organized is one of the most important steps for any business. Such documents will be used to prepare your taxes and keep track of all relevant information that may be needed by the IRS. Help in transferring older records into today’s formats may be needed as technology continues to revolutionize how businesses operate. You may need to migrate your physical (paper) records to relevant digital platforms.
Achieving such a migration smoothly is a big challenge for both large and small companies. Growing amounts of data require a great amount of time and attention to detail. Any slight mistake may cause significant errors in your tax returns. Furthermore, having disorganized records may cause your business to fail in paying its taxes on time. For these reasons, it’s critical to develop and maintain a system that makes tax record management easier.
If your company is a victim of poor tax record management, you may need IRS help to correct your tax issues and avoid costly fines. A tax resolution service like True Resolve Tax can represent your interests to the IRS, help that can extinguish any erroneous or disputed tax debt.
How your business may fall behind in tax record management
You may be wondering why it’s critical for your business to manage tax records, both old and current, properly. As typical business operations shift toward a fully digital environment, keeping large amounts of paper can increase the amount of time taken preparing, filing and storing tax returns.
Most businesses in today’s economy are data-driven. You may be collecting more data than ever before in the process of improving your operations. Larger amounts of data will ultimately translate into more documents needed for preparing your taxes. If you don’t manage these records efficiently, you may end up underperforming in the following ways.
1. Failing to pay taxes
Without an efficient system in place for managing your tax records, you may end up failing to pay your taxes as required by law. There are many different details to include in a tax return that determine the amount and timing of taxes you may need to pay to the IRS. It is imperative to be aware of the laws and requirements, which are often updated each year.
For you to keep up with these requirements, you need to have your records organized. Companies that lack a system of record management may end up neglecting their tax returns or failing to pay taxes entirely. The consequences of falling behind on your tax bill are undesirable and may include liens and levies being issued against your company assets.
2. Incurring penalties for unpaid or late taxes
Did you know there are over 100 penalties your business could face by failing to pay taxes? In Denver, your company may accumulate fines and penalties of up to 75% of the original tax bill.
If your tax records are a mess, you may end up incurring these fines and further compounding them over time. The IRS may also view your late or unpaid taxes as theft or neglect of the law. This often causes them to pursue your business aggressively while attempting to recover what you owe.
If your records are not well-organized, you may not even realize you’ve fallen behind on your taxes, and you may need to seek IRS help from a tax resolution service.
3. Incurring payroll tax debt
Every business that hires employees is required to deduct payroll taxes (from employee paychecks) and submit this money directly to the IRS. Withholding and filing payroll taxes on time requires an orderly and efficient system.
If your records aren’t well managed, you may end up making costly mistakes that the IRS will discover. Payroll taxes are not to be used for any other business expenses, regardless of the circumstances that your company is facing. Therefore, diverting these funds for other purposes (knowingly or unknowingly) may result in forfeiture of your business assets.
The IRS may also collect money directly from your customers, which will further affect your operations and reputation within your industry. Therefore, developing an efficient system for managing your tax records is essential.
How to manage your tax records effectively
Now that you know why proper record management is important, you may be wondering how to get your business compliant with the demands of good record-keeping. Here are several tips that can help you keep up with growing volumes of data. Doing this can help you avoid falling behind on your taxes.
1. Select the right digital platform
Going digital is the obvious choice if you wish to keep up with financial records. Whether you are a small shop or a multi-national corporation, you’ll need to select a digital platform that makes record management accurate, efficient, and effective.
Start by establishing what your specific requirements are and choose a platform that can collect and organize such data reliably. For example, you may need software that can collect receipts and organize bank statements for a specific period. You may also need a platform that can keep track of employee wages and pay stubs so you can report accurate payroll taxes to the IRS.
Choosing the right platform is not only crucial for preparing taxes, but it’s also critical when seeking IRS help. A tax resolution service will rely on these records when representing your interests to the IRS and finding a resolution for tax issues.
2. Don’t procrastinate when updating your records
Even with the right software in place, your business still needs to use it effectively. Make sure you don’t fall behind when updating your financial records. All information should be preferably collected in real time, and reports should be compiled on a daily or weekly basis.
Remaining current eliminates the backlog that could cause errors and confusion in your tax returns.
3. Use deferred payment for recording income and expenditures
Another useful tip is to pay your expenses on a specific interval (for example, at the end of the month). Using deferred payment will help you get a clearer picture of your overall expenditures while identifying any errors and implementing the necessary adjustments before tax season approaches.
If you need IRS help in the future, your Tax Resolution Service will have an easier time reviewing all relevant financial documents.
How a tax resolution service can help
If your business has fallen behind in its tax obligations, or you’re still in the early stages of cleaning up financial records, you may find yourself in need of a tax resolution service. Tax resolution comes in handy if you’ve underpaid, or failed to pay, your tax bill.
As you migrate to a digital system of tax records management, you may still face past penalties, fines, or liens from the IRS for unpaid taxes. True Resolve Tax can give you the IRS help that you need to get your business back on track. Companies, both large and small, have many different options available when resolving tax debt. From installment agreements to penalty abatement, we can help you arrive at a timely and effective resolution for any tax disputes with the IRS. Go digital while resolving any back taxes today.