Get Organized for Tax Season
Out of the Shoe Box and Into QuickBooks
Holiday lights are blinging, cash registers are ringing, and carolers are singing. It’s that time of year again… Tax Season. What?! Yes, you’re in the thick of the holiday season, but it’s time to start preparing your taxes, too. The truth is, tax season isn’t really seasonal, it’s year-round, and if you haven’t been doing your bookkeeping every month, it’s crunch time.
Whether you’re going to organize and file your taxes yourself or you’re working with a tax professional, it’s important to prepare. So, gather your vehicle information, receipts, payroll reports, accounting records, list of assets, bank statements, last year’s business tax return, roll up your sleeves, and get to work.
Get Organized:
Depending on your level of organization throughout the year, gathering together all the necessary supporting paperwork can be one of the most time-consuming and potentially frustrating tax season tasks. Getting your documents together now may be the key to not only your sanity but also to discovering additional tax deductions.
Gather all of your 2009 revenue and expense documentation:
- Bank statements for both business and personal accounts
- Loan statements, including lines of credit or SBA loans
- Credit card statements that reflect any business-related charges
- Customer credit card receipts to perform income reconciliation
- Expense receipts to perform expense reconciliation
- Mileage and vehicle information, including mileage logs, gas receipts and maintenance or repair receipts
Enter and Reconcile Your Data:
In a perfect world your accounting software should be completely updated on a regular basis – daily, weekly, or at the very least, monthly – giving you an up-to-date view of revenue and expenses. For a small business, keeping your data current is your lifeline to knowing where you stand financially and will enable you to keep an eye on your bottom line. In reality however, with customer demands and day-to-day issues taking precedence, this is something that can consistently fall to the bottom of your long to-do list. If it has, now is the time to bring your accounting software up to date with your revenue and expense documentation above. Don’t forget to also include:
- Income from credit card sales, checks, and cash, and interest to prepare for the end of the year reconciliation
- Expenses paid out through each business account
- Credit card payments, including any interest or fees assessed each month
- Loan payments, including any interest paid
- Vehicle mileage and expense information
- Entertainment, meal, travel, and gift expenses,
- Long-term business assets
Once you have all the documentation at your fingertips and all transactions have been entered, it is time to be sure there is nothing missing. This is a tedious task, but one that if you take the time to complete accurately and in detail, will make life easier for both you and your accountant
- Reconcile each credit card statement with your accounting software. Be sure each item is categorized appropriately, interest charges are entered and that the final end of the year balances match.
- Reconcile all credit card receipts to your bank statements to ensure you received all deposits from your credit card processing company. This is very important as there are often mistakes that could result in significant loss of income for you.
- Reconcile all loan statements with your software ensuring all interest payments are entered and the monthly and year end balances match.
- Reconcile the statements from your credit card processing company with your accounting software to be sure each fee assessed was entered.
- Reconcile your bank statements with your accounting software. Be sure that all bank fees are reflected, including overdraft fees, monthly fees and check fees.
These steps may seem a bit overwhelming, but try to take it one week at a time to minimize the stress. Setting aside several hours each week now will help you avoid the last-minute rush to dig up the necessary items for your returns. Although time consuming, this process is important, even if you use a tax preparer. Being prepared for your meeting means he or she can focus on the task at hand which will keep their time, and your cost, to a minimum.
If you need some help adding up that shoe box full or receipts, or you simply don’t have the time, patience, or attention to detail, to work your way through this process, let your Cybertary lend you a hand. Cybertary can prepare organized folders of documentation or update your books, while you take care of business.
