Preparing your Accounting, Payroll and Compliance in 2023
As 2022 comes to a close, we move into 2023 and the dreaded beast of tax season begins to show its face, it’s critical to keep a close eye on your accounting and payroll.
Your company’s accounting records need to be properly assembled, up-to-date, and ready to take on the start of a new year. Here is a list of tips and advice to keep in mind as we face the end of the year, as well as information about planning for next year.
2023 Accounting Preparations
To get started it’s essential to have a firm understanding of your end-of-year forecasts. You should have a good mental image of where you will be at financially at the end of the year to prepare for taxes and asses any current issues with liability.
You will also need to understand your budget for 2023. Building and maintaining your budget as 2023 begins gives you a map to follow along with solid goals to steer towards. Keep in mind all the factors that may affect your budget like new store openings or minimum wage increases. A good budget should be done in same fashion as income statement by location and by period for the full year.
If you’re planning on opening new locations, going through capital raises, gaining large receivables, non-expenses, or receipts that are not a part of day-to-day operations; you need to identify those in a cash flow forecast based off your budget.
Discerning where you stand in terms of liquidity is also vital facing the new year. So, it is important to come up with a plan to keep you in a good spot and avoid any issues with liability.
When looking at your finances for 2022 you need to make sure that all the assets you have capitalized over the year are correct. Your accountant should know what asset can be capitalized and which cannot.
Some of your assets will have depreciated over the past year so you need to also make sure all your assets are depreciated correctly. You will also need to understand which assets can be expensed for tax purposes so check-in with your tax preparer to make sure everything is in line.
Remember to make sure each of your employee’s accrued bonuses are for the correct amount. It’s important to reward your employees based on performance.
Before tax season arrives you’ll want to go through your income statement for 2022 with your accountant to make sure everything is correct. You also need to make note of any repair and maintenance expenses that you’ve accrued.
Compliance for 2023
In terms of government compliance in the start of 2023, you want to make sure you have everything you’ll need to file your 1099-K. The 1099 is due on January 31st. Your accountant will help you out getting everything together for filing.
You will need an accurate lit of everyone that you have paid over the year and any vendors that need a 1099. Keep in mind that any service providers who are paid over $600 who are not a corporations need a 1099.
Personal Property and Real Property for Taxes
As tax season comes around you’ll need to work with your accountant to differentiate between personal property and real property. Real property is described as land and buildings, while personal property is pretty much everything else.
You will need to list any new locations you are building, or plan to build in the next year, to ensure you have the costs segregated to understand which expenses will be included in personal property and which will not.
There are several year end filings that are due between January and April for 2023. Talk to your accountant about any city, county and state regulations that have due dates. Missing environmental fees, tourism bills, year-end gross receipts, and plenty more can incur unnecessary costs if left unchecked.
ERTC is taxable and you have 3 years to amend your 2020 tax return to claim the ERTC credits. It is also important to keep in mind your PPP and EIDL Interest.
Payroll for 2023
To make sure your payroll is operating flawlessly as we move into the new year you need to make sure all your information is correct. Here are some other upcoming changes to be on the lookout for:
- Please remind all your employees to check the address on their checks and send your payroll agent any changes that need to be made before the end of the year.
- Talk to your payroll specialist about Form W-2 and making sure everything is in order for your employees.
- You need to be on the lookout for letters from the state regarding the SUI rate for next year. SUI which stands for State Unemployment Insurance offers short term benefits to employees who lost their job.
- The Affordable Care Act helps Americans have access to health insurance. It’s important to keep ACA compliance in mind.
- Keep track of any letters from the state, city, and county regarding any minimum wage increase.
- Keep in mind that the 401k contribution limit for 2023 is $22,500 and 2023 Social Security Wage Base increase to $160,200.
- Please contact your payroll specialist about end of year bonus runs.