As a small business owner, you have no shortage of tasks you have to complete regularly. Taking care of details like back-office bookkeeping and small business accounting can become a hassle if your paperwork is not in order. Daily tasks such as tracking expenses, revenue, and profits can distract from important business growth.
You can avoid keeping up with your accounting needs for a short time, but as your business grows, you will need an accountant to help with your tax time needs. Messy bookkeeping can force you to pay hefty fees during tax season if you are not careful. Below are a few tips to avoid any issues along the way.
Keep Personal Expenses Separate
A business owner needs a dedicated bank account for savings and checking. Maintaining a business credit card or bank account can circumvent legal exposure to your corporation or LLC.
Record All Income
Losing track of incoming cash, revenue, sales, and loans will jeopardize your business. If you are not keeping a record, you can pay IRS penalties for underpaying your taxes.
Hire an Accounting Specialist
Hiring an accountant who works a few hours a week can reduce the stress associated with the IRS. An accountant can make sure that all of your recorded data is correct.
Sometimes, they will file your taxes and create a strategic plan for the upcoming tax season. A professional will keep your documents in order and up to date.
Accountants are also better equipped to avoid potential fees, find loopholes you never knew about, and handle business appraiser documents and other tax deductions. Having the right accountant can maximize your profit and help you focus on the essential responsibilities of being an owner.
Preparing For A Small Business Accountant
Preparing your taxes alone is daunting and quite tiring. Hiring a tax professional is a great way to create peace of mind and save time. However, showing up empty-handed can cause more harm than good. An accountant will expect prepared documents. Below are a few expert tips to ensure your next tax season is a breeze.
Personal Information
Personal documentation will be the first item you need to produce. This includes your address, social security number, and legal name. You can provide your social security card as a form of ID. If you have an Employer Identification Number, then give that information.
Tax Information from Last Year
Your tax accountant will also request your previous year’s tax return. This will help them understand your business and give them a quick overview of your company’s deductions.
Business Reports
You will need copies of all financial reports. These include your Balance Sheet, Income Statement, Profit and Loss Report, and Statement of Cash Flows. The balance sheet will display your company’s liabilities and assets, and the Profit/Loss Report will show the business’s general profit for the year. The cash flow will present all your transactions affecting the cash account.
Proof Of Assets
If you have any assets you have depreciated, bought, or sold during the last year, provide the proper receipts, reports, and documents.
Deductible Expenses
Some expenses require more than a receipt or document to file. For example, a business owner can deduct the cost of a home office. However, the owner must provide the home’s square footage, the mortgage or rent costs, repairs made to the house, and utilities costs.
Payroll Information
Have copies of your employee’s W-2s, W-3s, and 1099-Miscs. Your tax professional will need all the payroll data from the year and health insurance records.
One of the best ways to prepare yourself is to stay organized. A well-organized business can save money, receive tax benefits, and care for the tax professional´s needs.