Experts: Tax season is year-round for small businesses / Prevent costly audits and other missteps by preparing for tax day throughout the year.

Bennett J. Loudon for The Democrat & Chronicle writes:  Tax audit — two words capable of sending shivers down the spine of tax filers.

Just ask Jason Graham, 34, who opened his first store, Game Players Unlimited, in Brockport, when he was 19.

Graham, whose business empire now extends to two video game stores, a clothing store, two mixed-use properties and a direct-mail coupon book, was audited twice early in his career.

"It was my own fault and it was nothing major," said Graham. "It was because I was filing my own taxes and there were things I was forgetting to file."

Now he uses Flower City Tax and Accounting Services, owned by Valerie Hill.

"If I could give advice to a young business owner pertaining to taxes and the federal government and the IRS, that is: Pay attention. Stay on top of things," Graham said.

Year-long process

The April 15 tax filing deadline is just around the corner, but experts and experienced business owners say preparing for tax filing is a year-long process.

"We totally encourage, especially businesses, not to just meet with us from January through April. We really need to see people consistently to help them tax plan so that we're not dumping a surprise on them in February or March," said Hill.

"I would rather be able to put a Band-Aid on something in July or August than try to rupture this major bleed in February."

Business owners should segregate their personal and business finances. It can also be helpful to use a company credit card for business expenses, or submit a monthly statement to your business for personal expense reimbursement.

If you don't have a professional maintaining your books, experts suggest using computer software to track your money.

For most of us, the deadline for tax filing is April 15. But for S Corporations, a federal business entity designation used by many small businesses with up to 50 shareholders, the deadline was March 17.

"Most people use an entity primarily for legal protection to protect their business endeavors versus their personal affairs and personal assets," said Jim Schnell, a partner at Mengel, Metzger and Barr and head of the accounting firm's tax department.

S Corps don't pay income tax. They report business activity while the shareholders who receive income from the S Corp file personal income tax returns and pay income tax.

"When you have good people that know how to prepare information and know how to gather it, it's usually painless for an operations guy like myself. I rely on my accounting staff to take care of that," said Rich Gianforte, who owns Flower City Glass, with his sister, Karla. [snip]  The article continues at the Democrat and Chronicle, Click here to continue reading.