Are you attempting to make heads or tails out of all your paperwork before you take it to your accountant? Are you wondering just where to start? Follow these 10 Ways to organize for your business tax return like a pro.
10 Ways to Organize for your Business Tax Return
- Gather all your bank statements for all banking accounts for the business – this means all statements January thru December whether there was any activity or not. If you closed an account you will still need to show the final statement with a zero ending balance. If you used your personal account to pay for business expenses include these statements as well.
- Sort all your information into two categories – income and expenses. Income being the money you earned and the deposits you made. Expenses include anything you spent money on for your business during the year.
- Separate your expenses by month. Create a file for each month (January thru December).
- Separate your expenses into categories. If you want to save billable time separate your expenses into categories (auto, office, telephone, meals, etc.) Add up your expenses for each category include a list for each month with totals of the categories on the inside.
- Keep a check register. If you write checks be sure to keep a check register throughout the year and include your checkbook register for your accountant.
- Separate your income by month (January thru December).
- Total your income by month. Put your income in envelopes or files for each month with totals on the outside.
- Include credit card statements. If you use credit cards to pay for business expenses you will need to include all statements for the year January thru December whether there was activity or not. On the statements be sure to include a brief description of what the charges are for each month for example (gas, supplies, office, phone).
- Separate receipts for large purchases. If you purchased any equipment, furniture, machinery or computers over the amount of $500 be sure to keep these receipts separate from others as these transactions need to be handled differently. Keep them in an envelope labeled Fixed Assets.
- Ask questions. When in doubt ask your accountant or include any information you are unsure about.
Don’t panic, just breathe. Take it one step at a time and gather all your information. These simple steps will help you prepare your information as well as save you money. Organizing your information for your tax preparer will reduce your costs in the long run. Don’t wait till the end of next the year to organize you can use these steps to stay organized through the year and get stay ahead of the game. Contact us to learn more!