Keeping your financial records in order is hugely important to the success of your business. Whether it’s reviewing this year’s financials or planning for the next year ahead, you’ll want to put some time aside for tax prep. Our Chief Accounting Officer, Stacy Schott has shared some great tips so let’s examine a few end-of-the year tax prep suggestions that will help ensure that you are well-prepared come tax time.
Review your reports and paperwork – Profit and loss and Balance Sheet Statements
- Your business’ profit and loss statements will help you get a snapshot of its financial performance. What does your revenue look like?
- Your balance sheet report is your business financial condition at a specific moment in time, usually at the close of an accounting period. A balance sheet comprises assets, liabilities, and owners or stockholders equity.
- Before any year ends, make the most out of your deductions. Evaluate revenue and how much money you have available, and see if it might be wise to make a larger purchase before the end of the year so that the item can depreciate.
- And after every purchase, remember to keep the receipts and invoices!
Vendor and Lender Filed Forms
- Make sure all of your vendor 1099 forms are up-to-date and accurate. It’s important to review the paperwork, including 1099s associated with any of your vendors, as well as information relating to any current outstanding loans.
- 1099s: These forms should be mailed no later than January 31st to any independent contractors you hired. Don’t delay in case there are errors.
Form 1099-Misc should be filed for each person to whom you have paid during the year, if they have received:
- At least $10 in royalties
- At least $600 in Rents, Services performed by someone who is not your employee (including expenses paid), Prizes and awards, Other Income Payments, Medical and Health Care Payments, and Payments to attorneys. The term “attorney” includes a law firm or other provider of legal services.
- 1096:This form must be mailed to the IRS no later than January 31st.
- Payroll Forms(e.g. W-2, W-3, 940, 941): Print and mail these forms as soon as you can, especially if you’re handling it yourself and not asking an accountant or Remote COO to do it. Remember that your employees cannot file their taxes until they receive a W-2, and many people like to file as soon as possible.
- If you sell products, conduct an inventory assessment and compare the results to your last inventory report. Make any necessary adjustments so that you have an accurate account of how much capital you have wrapped up in your current inventory.
Hire a Professional
- The end of the year can get crazy, especially if you own a business. That’s why we always recommend hiring a professional to help you with the financial parts of your business so you can focus on your business for the new year ahead. Give Remote COO a call and we can get you set up on a path to financial record-keeping freedom!
There is no time like the present so use these tips to start preparing for tax season. You will feel better when it is all completed and you will be one step ahead of most people.