Now that tax season has arrived, your business must address several common risks. Protect your company now and into the future by taking a few straightforward steps.
Protect W-2s
The W-2 forms you supply to employees contain personal information a thief can use to steal an employee's identity. Safeguard all W-2s by handing forms directly to each employee or letting your team know when to expect them in the mail.
Counsel payroll personnel to protect W-2 details. Scammers may contact payroll and ask for lists of employees or W-2 information; if someone in your company releases that data, you could be liable.
If you discover a scam or attempted theft of W-2 data, contact the IRS immediately through their official channels.
Verify IRS Requests
Scammers sometimes send emails that look official and include an IRS seal, promise a refund, or request more personal information. Attachments in these emails can deliver malware or lead to identity theft.
Remember that the IRS will not initiate certain sensitive communications by email. If you are unsure about a message, verify its legitimacy directly with the IRS before opening attachments or providing information.
Discuss the Security of Your Accountant’s Records
Even if your internal practices are strong, your accountant or payroll provider may not use the same safeguards. Ask which steps they take to secure your information, including how they protect data sent by email and the returns they submit electronically.
If you find gaps in their controls, consider raising the issue with your accountant or talk to an agent about additional protections. In some cases it may also make sense to review specialized business coverage such as Small Arms Insurance depending on your operations.
File Taxes on Time
Your business faces penalties and fines for late filing. If you need more time to compile records, file for an extension to avoid late-filing penalties.
Report All Income
Failing to report income can trigger penalties; intentional underreporting can lead to much larger fines. Keep accurate records to ensure you report all taxable income and reduce the risk of mistakes.
Take the Correct Deductions
Your business may qualify for many deductions such as insurance premiums, office supplies, and travel, but only claim legitimate, ordinary, and necessary business expenses.
Certain deductions—like auto, home office, or entertainment—can attract additional scrutiny, so double-check eligibility and documentation before filing.
Final reminders
Follow these practical steps and keep an open line with your accountant as you meet tax obligations and protect your company. Review your overall insurance needs and, when appropriate, consider options such as Taxidermists Insurance as part of a broader risk-management plan.
Frequently Asked Questions
How should I distribute W-2s to minimize risk?
Hand W-2s to employees directly or notify staff when forms will arrive by mail to reduce the chance of interception.
What should I do if I get a suspicious email that claims to be from the IRS?
Do not open attachments or provide information; verify the message directly with the IRS through their official contact methods.
What questions should I ask my accountant about data security?
Ask how they store and transmit client records, whether they use encryption, and how they secure electronic filings.
Which deductions are most likely to trigger an audit?
Items like home office, auto, and entertainment deductions often draw closer scrutiny, so keep clear documentation and only claim legitimate expenses.