It’s that time of year again. No, I am not referring to the weather or the holidays. What I am referring to is far more exciting than that! It’s time to close your bookkeeping files and prepare for tax season. Here is a list of tasks to help you get organized and assess your organization’s financial health.
Reconcile all bank statements and record credit card charges. Reconciling bank statements help to make sure that you are recording all expenses and have received all payments from customers. When bank statements are reconciled on a regular basis, corrections can be made in a timely manner when the transactions are fresh in your mind. Reconciling credit card statements are equally important to make sure there are no invalid charges. Recording all expenses will ensure that your profit is correct and you are not paying more taxes than necessary. Also make sure you have copies of all receipts either digital or paper.
All customers have been invoiced for goods and services and Accounts Receivable have been reviewed for unpaid balances. Having an organized invoicing system will help ensure your business is successful. Review unpaid Accounts Receivable balances for errors and past due amounts.
Categorize expenses properly. It is easier to compare costs from year to year if they are categorized properly. Also, some expenses are deductible. So make your tax accountant’s job easier by recording the expenses in the correct category.
Don’t forget about mileage. Except for your commute to and from the office, any mileage put on your car for business purpose travel can be expensed. But keep detailed records that include the date, mileage, and reason for travel just in case the IRS comes knocking on your door.
Employees’ paycheck information is correct. Ask employees to review their paycheck for the accuracy of their name and address. This will prevent any W-2s from being returned in January.
Contractor services. Collect a W9 from any contractor that has done work for you over the year. A Form 1099 may need to be filed for the contractor in January.
Pay your estimated taxes. You pay enough in taxes; avoid paying penalties. Speak to a qualified tax accountant to make sure you have paid enough estimated taxes in order to avoid any penalties.
Prepare a budget. This can be done after all the year-end income and expenses have been recorded. Take the Profit and Loss statement for the year that just ended and enter information into the new year budget. Make any changes necessary for the sales and expenses for each month. It is important to review this information with the actual income and expenses throughout the year.
Following this list will not only help your business prepare for your year-end tax reporting, but also will provide your with a strong financial position into the new year. Hope your new year is healthy, happy, and profitable!