It’s tax time and are you ready to go meet with your CPA to have your taxes done? You’re going to want to have your business books “done”. What I mean by “done” is having all your income totaled up, your expenses totaled by category, and any other data prepped and ready to hand in to your tax preparer.
Here’s a hint - the more put together and “done” your business numbers are for your tax preparer, the less money it will cost you to have your taxes done. You do the hard work, so your CPA is not having to spend time putting your numbers together. A Money Maven knows her numbers and it really should not take much time to wrap up your books for the year.
So, what do you need to do to get your books “done” for your taxes? Whether you are using a bookkeeping software system or spreadsheets, here is a list what you need to do.
Enter all your transactions for the year. Use your bank statements, credit card statements and any other receipts you have and enter them to your bookkeeping system. If you are using an online program that downloads your banking transactions, make sure they are landing in the correct expense and income categories. Be sure to add in your mileage deduction and any cash receipts you have laying around.
Reconcile your bank and credit card statements. Make sure your tracking system is working, you have your balances correct, and the bank has not made any mistakes. (yes they do, I’ve seen it!).
Review your Accounts Receivable and Accounts Payable. If you are on an accrual bookkeeping system and keeping track of your outstanding invoices and the money you owe vendors, do a review of these and make sure the numbers are right. It’s also a good time to follow up with someone who owes you money or write off as bad debt. Or pay a bill that is still outstanding that you forgot about.
Review your Profit Loss Statement. This is the report that will list the total of your income and expenses. Make sure each line item makes sense. Dive down deep, look at what is making up each total. Any number that is a negative is a red flag and needs a closer look.
Review your Balance Sheet. Are all the account balances correct? Each account should tie into a bank statement, credit card statement, loan statement, money owed to you, or money you need to pay. Review your total assets and your total liabilities and make sure each of these numbers is correct. Your Net Income should match your Net Income found at the bottom of your Profit Loss Statement.
Get your auto mileage records together. How many miles did you drive total for the year, and how many were for your business? Also, jot down your card make and model and year. Your CPA will need this information for your tax return.
After you have reviewed every detail of your business books, your books are done! Print off the Profit Loss Statement and the Balance Sheet, or print off your spreadsheets. Send this information to your CPA with any personal paperwork.
Once your taxes are done, you’ll be able to use the money you have been saving in your Tax Savings Account. Oh no, don’t have one? Time to start setting up your business money management system to plan better for next year.
Need help with any of this? Schedule a Money Maven Strategy Call HERE and we can work together to get you ready for tax time.
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