Your Guide to a Smooth and Stress-Free Tax Season for Accounts Payable
As the holiday decorations appear and thoughts turn toward gift giving, it’s the perfect time to consider how to gift your Accounts Payable (AP) team with a sense of wellbeing. Don’t wait to get started on preparing for the 2025 tax season!
If the thought of tax season has you starting to sweat, don’t worry. At Mekorma, we’re all about helping your team reduce stressors and find more ease in payment workflows. Tax season is no exception.
Planning ahead, getting organized, and taking advantage of AP automation tools, such as bulk TIN Matching and address validation will help ensure a smooth process while minimizing the likelihood of errors that could lead to fines.
Keep reading to explore our guide to making tax season more manageable for your AP team.
Create Your 2025 Tax Season Checklist:
One of the best ways to get ahead of tax season prep is to get aligned on your to-do list early. We recommend creating a digital list that can be shared with the whole team, so everyone knows what to expect. This checklist can include important dates, timelines, roles within the team, data gathering, and communication plans to help support a smooth process. The more you do before the end of the year, the better you’ll be set up to tackle tax season with ease!Stay Informed about Any Tax Law Changes:
As you’re preparing for the 2025 tax season, it’s important to keep an eye on any updates or changes to federal, state, and local tax legislation. Make sure you stay informed about any IRS updates and watch for changes to compliance requirements or deadlines. Any changes could significantly affect your tax process, so it’s best to stay informed!Review and Organize Your Vendor Documentation:
Accurate vendor data is vital to your organization’s health and wellbeing. Now is a good time to check that all vendor data is current and accurate. If any of your vendor data exists solely in physical form, we recommend creating a digital copy, which your team can easily access and review.
It’s in your organization’s best interest to ensure all applicable US-based vendors have completed a W-9 form as part of onboarding and maintenance. Keep those forms on file and organized in case of an audit. This information is especially important for vendors who will receive 1099 forms. We recommend reviewing your vendor documentation and following up with any that are missing W-9s before the end of the year. This will save you a lot of time and stress in January!Classify Payments:
If your organization uses contractors or freelancers, be sure to identify these payments for your 1099 reporting. It’s also important to separate payments for 1099 miscellaneous reporting. These include payments of at least $600 such as: legal fees, rents, prizes or rewards, medical or healthcare payments.Validate Vendor Data & Update Missing or Incorrect Information:
Confirming vendor authenticity and reducing your risk of fraud are top priorities for tax season. Ensure you have correct and up-to-date TIN and address information for each of your vendors. We also recommend confirming Office of Foreign Assets Control (OFAC) compliance to support peace of mind or raise any red flags early.
Vendor compliance and validation checks are an important part of reducing your risk of audits and fines and increasing security in your payment process. When prepping for tax season, we recommend starting to review your vendor data for accuracy as soon as possible. Ideally, you should aim to check vendor data regularly throughout the year.
The vendor validation process can be time consuming, especially if you have a large list of vendors. For Mekorma users, we recommend taking advantage of our vendor validation feature within the Payment Hub, which includes automatic bulk TIN matching, address validation and OFAC screening. These automation tools allow you to speed up the vendor review process through automation and easily spot any potential issues or errors. Once you have identified any issues, your team can follow up with vendors right away to clarify tax information or address details.Whatever You Do, Don’t Panic!
Tax season can be a source of genuine stress and worry for many in the AP space. But you will get through this! Taking each step of the process one at a time will help prevent overwhelm. Don’t forget to take breaks and ask for help if needed. Working collaboratively with your team to achieve your shared goals will make the work easier and more rewarding in the long run. And if you can, don’t wait until the last minute. You’re less likely to make errors or feel stressed out if you aren’t in a rush. You’ve got this.
Once you have compiled, classified, and validated your vendor data and payments, you’ll be ready to dive into tax season with confidence! The steps we’ve outlined will help you and your team get organized and tackle your tax reporting for 2025 with as little stress as possible.
Not yet a Mekorma user or need to set up the Payment Hub? Speak to a member of our team. We’d be happy to help. Wishing you a fabulous and smooth tax season from all of us at Mekorma!
