If you find yourself filing for a tax extension each year, you'll be happy to discover these five bookkeeping tips that will help you get your taxes in by the first deadline. Now you can stay on top of your bookkeeping tasks, plus get ahead of your accounts for next year.
Review Your Life Changes
Go back in your mind over the past year. Did you have any big life changes that might impact your business filings? Did you add or remove employees? Did you change office locations? Did you change from cash based to accrual accounting? Go from month to month, carefully considering all the changes you made.
Get Your Personal and Business Credit Reports
This isn't necessarily a bookkeeping task, but it will impact your taxes if there's a problem. Even the IRS was hacked in 2015, and identity theft in general is on the rise. Obtain a copy of your credit report and carefully review all the entries. If there's any fraudulent activity, there's a chance that someone will try to file your tax return and gain access to any refund that is due to you or your business.
Make SEP Contributions
You can make deductible SEP (Simplified Employee Pension) contributions all the way up to a certain date in the upcoming year (ask your bookkeeper for details). Don't wait until the last minute to contemplate taking advantage of this huge tax saver strategy. Any contributions will cost you money, so you'll need to have cash on hand in advance in order to take advantage of the tax benefit. If you don't have a SEP plan in place, you can even start one. If you do it in time, you'll still be able to take the deduction.
Choose Your Accountant
Your bookkeeper will be able to organize your business transactions so that you can easily hand them over to a qualified accountant. But you'll need to have an accountant in mind well ahead of time. Accountants get super busy during tax season, and priority will most likely be given to older clients. If you're using an accountant for the first time, you'll want to establish the relationship well in advance of the upcoming tax filing.
Why wait until the last minute to get your records in order? Don't wait. Start now by organizing all your records. Go through each account in your accounting software and make sure everything has been allocated correctly. Check especially for non-categorized income and expenses on your Profit & Loss report. Nothing should be in the "non-categorized" category. Next, make sure you have correlating receipts for everything in your expenses category. If anyone ever asks to the see the back-up receipts, it will be nice to know that you definitely have them.
This can seem like a lot to handle for a business owner who already does so much. Consider outsourcing your bookkeeping to a company that specializes in business accounting, such as Nathan Professional Corp bookkeeping.Share
3 March 2016
Whether you're a regular employee or freelance contractor, filing your taxes on time and correctly isn't always a simple task. It seems that there's always some new tax code or rule to follow at the end of the year. If you're like me, you may not understand many of these new changes, especially when they pertain to your family and expenses. Claiming the wrong tax credit, or even leaving out the right one, can lead to problems with the IRS. I developed a blog for anyone who needs advice, tips and information about taxes, including how to maintain good tax records throughout the year. Don't wait until your taxes become unbearable. Do something about them now by reading my blog. Thanks for checking in and good luck.