An Accounting Prescription Series: 4 Quick Accounting & Tax Tips for 2016
There are several things you can be doing on a daily basis to improve your accounting and tax situations. Procrastinating with your accounting and taxes until year end can cost you money and time – plus leave you with a big end-of-the-year headache. To help get a jumpstart now on the year end, here are a few tips to get you started.
- Always get an IRS Form W9 – tax information form – from vendors before you pay them. This simplifies 1099 processing exponentially and saves you money in preparation costs and potentially penalties. Noncompliance with 1099’s can be very costly so this is not something to ignore.
- Payroll is complicated and frankly no one likes it. Payroll taxes take money out of your pocket. As a result, many pharmacy owners will pay employees cash here and there. Of course, this is not in compliance. Failure to pay required taxes on payroll to employees can be very costly. The IRS is very strict on payroll tax compliance so make sure your payroll is handled correctly. In addition to normal payroll IRS compliance, make sure your payroll is in line with industry benchmarks for a pharmacy of your size. Payroll is your biggest expense outside of cost of goods sold. It needs to be closely managed.
- Find technology updates in your pharmacy. Whether it’s a new robot, a new computer script system or a new cloud based accounting system, the use of technology is critical so update it.
- Monitor your inventory closely. There are a lot of dollars on those shelves so make sure you’re keeping inventory efficient and trim. Use technology such as perpetual inventory systems and period physical counts to reconcile differences.
These tips will get you started on a proactive basis to take control of year end. Don’t let year end be a surprise, take advantage of the opportunities throughout the year to improve your pharmacy, accounting and tax processes!