Tax season is here--and that means time to file your taxes. Do you have everything you need in order to ensure that your taxes are filled out correctly? Whether you're filing them yourself or headed in for a meeting with your CPA, it's important to be sure that you have the right paperwork in hand to make the process as smooth as possible.
1099 are issued to any service provider who is not part of a corporation and who receives more than $600 from a given company over the course of the year. If your business has received services from freelancers and other individuals that totaled more than $600, you'll need to issue these forms. If you have a small company or simply work as a private contractor, you may have these forms coming in from your clients. Make sure that all of these forms have been filled out correctly and that you have your forms on hand before you visit your CPA or sit down to file your taxes. Take a look at your records to make sure that there aren't any late 1099s floating around.
It's not just your business bank statements that come into play around tax time. Chances are, as a small business owner, you've used your personal accounts to pay for items related to the business: a quick purchase through PayPal, scanning your personal credit card just because it's the one in hand, or perhaps using another online account that was originally intended for personal use to take care of a business purchase.
Fortunately, those expenses can all be deducted on your taxes--but not if you forget about them! Reviewing your bank statements will make it easier to determine what business expenses need to be noted on your taxes.
You'll also need to look over your business bank statements to make sure that there weren't any personal expenses that ended up running through your business accounts so that you can credit your business appropriately.
Are you still paying off business loans? If so, take a moment to make sure that everything matches up and that the loan balances on the statement are the same as the loan balances on the balance sheet. Make sure that you bring these documents with you as you're preparing your taxes.
Have you made any major asset purchases for the business--that is, equipment, vehicles, or other items that are worth more than $500? If so, these receipts should have been filed away--and you'll need to pull them out in order to properly file your taxes this year.
When you travel for business, you keep careful track of your spending so that you can appropriately deduct your expenses. It's important, however, that you don't just lump it all under one category. Keep specific records for travel, entertainment, and food on your trips so that your CPA can easily differentiate between the different expenses and deduct them appropriately.
As a small business owner, you have the ability to deduct business mileage and usage from your personal vehicle. It's important, however, that you do this according to a log, rather than simply estimating the amount of business use your vehicle sees each year: the IRS requires an actual log, not just a vague estimate of the amount of time your vehicle has been used for business purposes.
Tax time can be highly frustrating for many businesses, especially those who haven't kept the right records throughout the previous financial year.
By gathering these key documents--and keeping them organized in future years to make sure that you're able to better manage your tax information--you can make it easier to file your taxes and ensure that you aren't paying more than you need to. Need help preparing your taxes? Contact us today to learn how we can help.