It is time to rumble! That means it’s tax time. I know, I don’t like it either.
Let’s be clear, I am not an accountant, I am a business advisor. That means that I am committed to helping you be fiscally responsible with the funds that we make and spend, and how to leverage those funds.
Why am I passionate about it? Because I was JUST LIKE YOU!I used to think I had a GREAT accountant because I didn’t pay any taxes.Hooray! But that was so naïve. If you’re making money, you have to pay taxes, especially Social Security. You cannot cheat and be prosperous at the same time.
I pulled this information together from places like Motley Fool, Fundera, and H&R Block.
First things first – you need to meet with your bookkeeper.
If you don’t have one yet, we need to find you one. Ask friends and clients for referrals. Just remember not to spend dollar times on penny jobs.
Keep in mind, many bookkeepers won’t prepare your taxes or your tax return. However, an experienced bookkeeper will help you get prepared and will now many of the answers that your tax account will be asking.
I use my bookkeeper to help me keep things up to date each month so that I don’t have to do it all at once.
Secondly, ensure all of your accounts are fully reconciled.
This will be a snapshot of where you are financially. Being comfortable with your books BEFORE your tax appointment will make the process go much more smoothly.
I keep a binder in my office that stays up to date all year long.
Next, gather all of your bank statements.
Many tax preparers will want to review this head of preparing your taxes. This helps ensure that the balance sheet and the actual balance match.
Capture all of your out of pocket expenses.
I don’t ever use cash, because it gets lost. So, keep your receipts and check all of your personal recurring accounts. This is why it’s so important not to intermingle your business and personal accounts.
Gather all of your 1099 forms.
This helps the IRS ensure you pay your proper taxes. The 1099k form will be relevant for large credit card transactions.
Two questions you must answer here:
Did you make any payment that would require you to file these forms?
If yes, did you and will you file the required form?
This means you’ll need a 1099 form for any payments involving a non-corporate provider that pays you more than $600 in a given year. Keep in mind that payments made through credit cards or services like PayPal will not require these.
Pull receipts for any asset purchases.
This can be computers, furniture, vehicles. They usually cost more than $500, will be used for more than a year, and will depreciate. You’ll need to know when the asset was purchased and what was included in the purchase price.
Ensure that your loan balances match what is on your balance sheets.
Review your loan statements at the end of the year to make sure everything is attached.
Also, make sure that all of your meal expenses are properly categorized.
Some of these will only be 50% deductible, but many will be 100% deductible.
You’ll need to note any changes in ownership.
It can have a huge effect on the equity in your business and can have tricky tax ramifications.
Schedule a pre-appointment call with your tax preparer.
Riches Through Relationships: Centers of Influence (COIs)
Discover how to harness the power of centers of influence to skyrocket your business growth. Learn key strategies for identifying, engaging, and nurturing relationships with influential individuals and entities.
