It’s never too early to prepare for that looming tax deadline, especially when you look at the calendar and tax season official starts January 23, 2017! That’s today! Ideally, property management businesses prepare for tax season all year by keeping updated records, verifying information for completeness and accuracy, and organizing documents, so when the day comes to file it’s easy. In practice, however, the weeks, days, and even hours before the due date usually mean spending some time on last-minute details. Tax season can be disruptive and take time away from other important business duties.

If you feel like you were in a whirlwind last year hunting down lost paperwork and getting your taxes in order, there are a few things you can do now to prepare. You’ll never fear tax season again!

#1. Verify Information for 1099s

If you need to send out 1099s to property owners or vendors, it’s a good idea to make certain that you have their correct names, tax IDs, and addresses on file well in advance. If you’re missing any W-9s, you’ll need to request them from anybody who gets a 1099. (You’ll also need this tax information if you want to take deductions on your own taxes.) Seasoned property managers learn that it’s usually best to simply require a W-9 before making that first payment, but this doesn’t always happen in the real world.

Some property managers aren’t sure which owners or vendors need to receive a 1099. If you’re not sure who you need to send out a 1099 to, you might consult with a tax professional or check the latest IRS information on that topic.

Tech Tip: Technology is a huge time-saver when it comes to keeping on top of your 1099s. With the right property management software, you can send 1099s directly to owners and vendors electronically. Or, if you need to print one, you can do so without needing to purchase blank 1099 forms (a major bonus). You can also download FIRE files to e-File large batches of 1099s to the IRS.

#2. Dig for Tax Deductions

Some property owners and managers may overlook common deductions. For example, insurance that gets purchased for the property management business should be tax deductible. Most property managers know about deducting landlord insurance. However, if an umbrella insurance policy was purchased to provide extra liability insurance for the property owner, it should also be considered. Examples of other commonly overlooked deductions include mileage for vehicles and software or computer expenses.

If you’re uncertain what you can deduct, hiring a tax professional might end up saving money in the long run. Also, make sure you keep track of all of the money that you spend on maintenance, business operations, and repairs. Some expenses may seem too small to bother with, but they can add up over time and with multiple properties.

#3. Stay Updated on Tax Law Changes

This one seems straightforward, but it’s difficult to prepare for tax season if you don’t know the current rules. Changes to federal and state tax codes could even impact some business decisions, so it’s wise to plan ahead.

Avoid any surprises by proactively keeping updated on changes to the rules. One very good resource for tax news that’s oriented towards property managers is the National Apartment Association. Simply visit NAAHQ.org, and search for “taxes”.

#4. Let Software Do the Heavy Lifting

Staying well prepared for tax season requires having a good system in place. Robust software can help integrate this system into all daily business activities. By consolidating everything from leases and rent collection to electronically storing important tax documents and vendor information, property managers rely on updated and accurate data and more simplicity in every aspect of their business.

For example, property management software can accept online rental payments, make payments to owners, and even expedite communication. Since everything gets stored in the same system, it’s easy to reconcile and track both revenues and payments. Rather than spending time hunting down and verifying payments and receipts, documents can simply get printed, emailed, or shared online with tax professionals or even the IRS. Property management software can save a lot of time, and this can be particularly beneficial at tax time.

From: https://www.appfolio.com