January is here! It means a new year of exciting new opportunities for your small business. It also means Tax season. A lot of times there are groans of dread associated with those two words. The stress of preparing taxes, digging out receipts, and digging out of your deepest memory what you spent on what last year, can have you pulling your hair out! However, you can make things so much easier for both you, and your accountant. In order to simplify tax season for everyone, just have a few crucial documents ready, and be organized.
Your CPA will mostly need to see your income statement in filing your taxes, but in order to get a more accurate idea of your financial year through assets and liabilities, also bring along a balance sheet and cash-flow statement. If you’ve had any changes to your capital assets, they must be accounted for, so you’ll need to print and bring along a list of those as well.
Of course you need to bring in all receipts of business expenses for the year, but in order to give your accountant more time calculating your taxes and less time sorting through miscellaneous receipts, organize them. Make folders for different categories. Label them clearly; trust me, your accountant will be extremely grateful!
Home office and Vehicle Deductions
Do you operate your business from the comfort of your home? If so, you will definitely want to claim “home-office” expenses on your taxes this year. Some accountants require that you bring in all of your receipts from these expenses, and others just require the completed summary of how much you can deduct.
Also don’t forget to keep track of your vehicle log, if you use your personal vehicle for the business. Keep track of the miles driven for business throughout the year, and a portion of your vehicle’s operating costs (i.e., gas, repairs, and oil changes) can be deducted from your business’s income.
You’ll receive a 1099 form from your mortgage company, and this is certainly something you’ll need for filing taxes, but in addition to that, it is a good idea to save your individual mortgage receipts, to bring in as well. This will confirm the accuracy of the 1099 information, and give your CPA a better idea of what your future interest deductions will look like in the year ahead.