Year-End Tax Solutions Checklist for the Small Business Owner

Transcription

1 Year-End Tax Solutions Checklist for the Small Business Owner Prepared by John Leidy, Tax Professional 1

2 That dreaded time of year is fast approaching again: TAX TIME! I don t know any small business owner that doesn t start stressing when they first hear from their accountant for scheduling the annual tax appointment, especially if you just started your business this year and don t even know what that means. Well, I am here to tell you that it can be a relatively painless and simple process if you have been keeping up with your financials throughout the year. If you have a virtual bookkeeper because you use one of the many online or software tools out there, then you should feel comfortable that you will be in great shape and will only need to gather a few documents to bring to your meeting. If your bookkeeping system consists of a manila folder or even perhaps an old shoebox, you probably have not reconciled your accounts. In that case, you ve got some work to do. You may ask yourself, what is the difference between a bookkeeper and a tax professional. Well here s the answer simply explained o o Bookkeeper manages the day-to-day transactions and provides you with reports and/or information pertinent to running your business. Tax Professional advises you on your tax position and prepares your tax returns If you do not have a bookkeeper and are handling the bookkeeping aspect on your own, here are 5 things that you can do to make the tax season smoother for you in preparation of tax time. 1. Contractor Clean-up In preparation for 1099s, take a look at your vendor list now and identify who should receive a Perform a mini-audit for any W-9s that are missing so you can plug in your tax IDs without scrambling at the last minute. 2. Check or PSE Also in preparation for 1099s, you ll need to break out payments made to vendors by check versus credit card, third party or what the IRS calls PSE, payment settlement entity. You ll only need to issue 1009s to vendors you wrote check to. 3. Calculated Moves Is there anything you can calculate in advance of crunch-time? If you had loans, you can secure the appropriate amortization schedules. If you have depreciable assets, some of these schedules can be prepared ahead of time. Did you sell any major assets? A summary of the transaction can be prepared and ready to go. 4. Playing Catch-Up If you are behind in your bookkeeping, filing, bank reconciliations, or other accounting chores, it s a good time to get caught up so all the routine stuff is out of the way. 5. Getting Organized When the year ends and the tax documents start arriving, pace them in a special folder or stack so that all the papers are together. Scan them in and place them in a specially labeled folder on your PC. You ll be more organized than ever and preparing your tax returns will be a breeze. I know that all of this can be very overwhelming for many small business owners, especially if this is going to be your first tax season with a small business. Chances are, you do even know what most of this means. That s where I can help. With JDBC Tax Solutions, not only will I help you with the tax side of your business, I will be your bookkeeper too. My goal is to make it easier and more affordable for you so you can spend your valuable time on building your business, developing your brand and realizing your vision. 2

3 Tax Preparation Checklist for the Small Business (No accounting file available) Income: Gross receipts from sales or services Sales records (for accrual based taxpayers) Inventory - if applicable o Beginning Inventory o Inventory Purchases o Ending Inventory o Items removed for personal purposes Returns and allowances Business checking/savings account interest (1099- INT) Expenses: Transportation and Travel Expenses Local Transportation o Business trip (mileage) log o Log or receipts for public transportation, parking and tolls Travel away from home o Airfare or mileage (actual expense if drove) o Hotels o Meals and tips o Taxes and tips o Internet connection (hotel, internet café, etc.) Advertising Subcontractor payments (1099- MISC and 1096) Depreciation o Cost and acquisition date of assets o Sales price and disposition date of any assets sold Fringe Benefits 3

4 o Employer- paid pension/profit sharing contributions o Employer- paid HAS contributions o Employer- paid health insurance premiums o Cost of other fringe benefits Business Insurance o Casualty loss o Business liability o Errors and omissions o Other Interest Expense Legal fees o Mortgage interest if building owned by business o Business loan interest General Office Supplies Rent Expense o Office space rent o Auto lease o Other Office- in- home o Square footage of office space o Total square footage of home o Mortgage interest or rent paid o Utilities Wages paid to employees o Form W- 2 and W- 3 o Federal and state payroll returns (Form 940, etc.) Other expenses o Repairs, maintenance 4

5 Tax Preparation Checklist for the Small Business (Accounting file is available) Back up of accounting data file Copy of Balance Sheet and Profit & Loss as of December 31, 20XX Accounts Receivable Report if accrual based List of fixed asset additions/deletions List of tax payments made in tax year Bank statement and reconciliation reports for all accounts at December 31, 20XX Quarterly or year- end payroll reports for tax year List or report showing employees hours worked for the year and if they are full- time or part- time (for small business health insurance credit) Profit Sharing Plan Contribution Analysis Quarterly sales tax returns List of health and life/disability insurance premiums paid for all officers of company Invoices/agreements for new vehicles purchased/leased Any Internal Revenue Service and Department of Revenue correspondence received List of activities performed in other states 5