Here are some tips to consider in preparing your books for the upcoming tax time.
If you are using an Accounting Software, such as QuickBooks:
- Make sure you reconcile the bank accounts, which is verifying that what you have in your business’s bank accounts actually matches what Quickbooks thinks you have in those accounts.
- Enter all of your credit card charges.
- If you have a business loan or line of credit, make sure the activity such as payments and advances are entered, and don’t forget to provide the year-end statement to your tax preparer.
- Any loans from you should not be recorded on the income statement, but in an asset, liability or equity account. You should do the same thing for any money withdrawn from the business.
If you are not using Accounting Software:
- Make sure to summarize all of your expenditures, including cash, checks, and credit cards by expense category.
- Your income should not include any sales tax collected.
If you use your automobile in the business:
- Include the year and make of the car being used.
- Include the total and business miles driven throughout the year.
- Make sure to breakdown all of the expenses, such as gas, repairs, insurance and registration.
- If you acquired the car during the tax year, make sure to bring the purchase contract to your tax preparer or make a copy if doing it yourself.
If you have employees, bring the following payroll forms to your tax preparer or have copies of:
- Form 940
- Form W-3
- State year end form
If you claim your office in home deduction:
- Include office and total square footage of your home
- Include your interest and property taxes or rent
- Include your homeowner’s or rental insurance
- Include your homeowner’s association fees if applicable
- Include all of your utilities
The advantage of using a Quickbooks Pro Advisor during the year is that all of this work is already done for you. If you manage your books yourself, hopefully you have organized all of your tax information throughout the year so it won’t be much of a hassle finding all of these items. If you do have any questions, talk to your tax preparer and they will be able to guide you in the best way to get all of this done.
Remember that Davik Consulting can help you to get your documentation in order from 2012 and we can assist you in making sure that next year at this time, the process will be simple and painless!