As 2017 comes to a close and tax time nears, are you prepared? If not, let’s take a look at how we can make the upcoming tax season a breeze. Greenleaf Accounting Services has created a list of things you can begin to prepare for now to eliminate last-minute stress come filing season, get a […]
As 2017 comes to a close and tax time nears, are you prepared? If not, let’s take a look at how we can make the upcoming tax season a breeze.
Greenleaf Accounting Services has created a list of things you can begin to prepare for now to eliminate last-minute stress come filing season, get a faster turnaround, and make your accountant’s job easier — saving you some green in the long run.
• Income records — You don’t need to bring your tax preparer a copy of each check you deposited or a copy of every invoice you paid. Rather, you should be prepared to bring a summary of those sales that is detailed enough for your tax preparer to understand your business. If your customers report your payments on 1099-MISC forms, be sure to bring them with you. Remember, that you have to report all income that you earned, whether you received a 1099-MISC form for it or not.
• Other income — Don’t forget to bring any documents you received that report interest or dividend income you may have earned on your business bank accounts.
• Expenses — Prepare a summary of how much you spent on each category of business purchases, including office supplies, advertising, postage, travel expenses, and so forth. Try not to leave anything under the miscellaneous expense category. By the time you’re done, your summary should account for all business expenses for the year.
• Equipment purchased and sold — If you bought a new computer or other equipment for your business over the past year, you’ll need to give your tax preparer details on the date, amount paid and description of the equipment. Likewise, if you sold or trashed some of your old equipment, you’ll need to make a note of what was sold or disposed of, the date, and how much (if anything) you were paid for it.
• Vehicle log — Whether you have been tracking your business mileage with pen and a paper log or using the latest mileage app, you’ll need to provide your tax preparer with several crucial numbers: total miles driven during the year and how many of those miles were driven for business. As with much of your information, you don’t need to give your tax preparer your actual mileage log, but you will need to have an actual log and keep it available in case your tax preparer has questions or in the event of an audit.
• Home-office expenses — Claiming a home-office deduction is not the red flag that it used to be. Simply write down the total square footage of your home office; total square footage of the entire home; and the amounts paid for rent or mortgage interest, utilities, homeowner’s insurance, and other home office expenses. In the event of home-office expenses like Internet access, be prepared to bring at least one complete monthly statement so your tax preparer can see the details. To make life even easier, you could always claim the simplified deduction which lets you claim $5 per square foot for your home office. This option is especially appealing if you neglected to save all those utility bills all year long.
• Inventory listing — If you carry inventory in your business, be prepared to bring a detailed listing of year-end inventory counts and values as well as a summary of how much you paid for your inventory throughout the year. Your tax preparer will need to know how much you paid for the inventory left on your shelves as of year-end.
• Forms you prepared — If you issued 1099-MISC forms to independent contractors for last year, be sure to bring a copy of those forms, too.
• Return copies — If this is your first year with a new tax preparer, be sure to bring a complete set of last year’s tax return with you. It will save a ton of questions and time.
So, after considering these tips, are you prepared? If not, start organizing and preparing yourself sooner rather than later. If you aren’t already using a bookkeeping platform, consider making this a goal of 2018. It may be difficult during the transition, but in the long term it will save you a lot of time, headaches, and money, and give you a better grasp of your bottom line.
Keyona Kelly is a business advisor at the Small Business Development Center located at Onondaga Community College. Contact her at k.r.kelly@sunyocc.edu.