4 Tips This Tax Season for Your Business
If you are buried deep in the thick of tax documents, reports, 1099s and numbers that make your brain swim – I’ve been there too! And I established a few tips and tricks along the way to make the process more manageable…Hopefully these will help you and your business in the same way they have helped mine!
Establish a Quality Bookkeeping System
The easiest way I have found to keep and maintain excellent bookkeeping records in an organized fashion – if you don’t outsource this to a professional bookkeeper – is through QuickBooks. Within QuickBooks, you can reconcile your accounts (and credit cards) to their appropriate statements, organize expenses and income into categories, run reports, and track vendor payments for 1099s. You can also attach W9s and receipts to records (or other files) as you need them. This simplifies the process and keeps everything neatly organized. Within this system you can also invite your CPA into your platform so that they can see everything you need them to at tax time.
Save yourself the time and energy of a hardcopy paper trail – and find a system of organization that keeps your books in order.
File 1099s Electronically before January 31st
You can file 1099s directly through QuickBooks, but if you have to do this for several different businesses then I find it is easier to use another platform like FormSwift. Within this platform, you can digitally create and file 1099s (or other documents), and FormSwift will mail copies to you, to the recipient and the IRS – in addition to providing digital copies to everyone. I have printed hardcopies in the past, which is time consuming, and I prefer this streamlined digital approach much better. You just need to make sure you have a W9 on file for any vendor to whom your business paid as an independent contractor in the amount above $600. It is also a good idea to double check that all names, addresses, EIN/Social security numbers are correct before submitting the filing. You want to keep a copy handy of all the 1099s you submit so that you can provide these copies to your CPA.
Reconcile Your Accounts, and Generate Quarterly Profit & Loss
If you use a platform like QuickBooks, this part is a piece of cake! QuickBooks can generate reports for you, so you just need to make sure that each expense item and income item have been categorized correctly and balanced with your bank and credit card statements. You want to make sure that any disbursements made to investors throughout the year for all the businesses are not itemized as expenses on the profit and loss (since this is a distribution of equity), and you will want to provide these amounts to your CPA separately. If you have any questions about how anything should be categorized within your Profit & Loss statement, it is best to ask a professional for advice.
Consult Your CPA & Share Copies of Everything!
You want a CPA who specializes in your particular line of work to ensure that your taxes are being taken care of in the way they need to be. If you are an entrepreneur, you want a CPA who is familiar with self-employed taxes. Do some research in your line of work to find a CPA – even if they charge more for their services – since they could save your business a lot of money in the long run.
Quick Tips: You will also want to make sure to provide your CPA with any “Doing Business As” Name Amendments, a General Ledger and Trial Balance for your accounts, in addition to any previous year’s Tax Returns, your company’s information, and any other pertinent tax document or information to help them complete your taxes.
*This post is provided as a courtesy. I am not a certified public accountant, you are advised to seek professional help elsewhere for your situation.*
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