How Small Business Owners Can Prepare for a Smooth Tax Season
Tax season can be stressful for small business owners, but with preparation and organization, it can run much more smoothly. By proactively gathering information and communicating with your bookkeeper, you can avoid last-minute stress and ensure accurate, timely tax filings. Here are key steps you can take to make tax time seamless, along with additional tips you might not have considered.
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Submit All Requested Financial Statements to Your Bookkeeper: Make sure that any requested financial documents — including bank statements, credit card statements, loan statements, and any statements for accounts listed on your balance sheet — are gathered and sent to your bookkeeper on time.
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Gather and Organize Receipts: Ensure that all business receipts are accounted for, whether digitally stored or organized in physical files. Categorizing receipts by expense type makes review and documentation more efficient.
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Collect and Submit All W-9 Forms for Contractors: Gather W-9 forms from all contractors paid $600 or more throughout the year. Submit these to your bookkeeper early so they can prepare and file 1099 forms on time.
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Answer All Bookkeeper Questions Promptly: Your bookkeeper may need clarifications on specific transactions or expenses. Responding quickly to these questions helps keep the books accurate and up to date.
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Ensure All Accounts are Linked to QuickBooks: Verify that all business bank accounts, credit cards, and payment platforms are connected to QuickBooks or your accounting software. This ensures all transactions are automatically imported and reduces manual entry errors.
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Reconcile Accounts: Confirm that all bank and credit card accounts have been reconciled up to the most recent statement. This ensures your financial records are accurate and complete.
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Review Fixed Assets and Depreciation Schedules: Work with your bookkeeper to confirm that all fixed assets are listed correctly and depreciation schedules are up to date.
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Verify Payroll Records: Ensure that all payroll data has been recorded accurately and that W-2s are ready for distribution.
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Check for Missing Invoices or Unpaid Bills: Review accounts receivable and payable to confirm that all client invoices have been sent and all vendor bills are accounted for.
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Schedule a Year-End Review Meeting: Meet with your bookkeeper or tax professional to review your financials and discuss strategies for reducing tax liabilities.
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Plan for Estimated Taxes: Ensure that all quarterly estimated taxes have been paid and documented. This helps avoid penalties and interest charges.
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Notify Your Bookkeeper of Your CPA Meeting: Let your bookkeeper know when your scheduled tax meeting with your CPA is so that they can have everything ready in time, and make sure your bookkeeper has closed everything before your CPA pulls any reports from QuickBooks Online.
Conclusion
With proactive planning and strong communication with your bookkeeper, tax season can be a smooth and stress-free process. By submitting requested statements, organizing receipts, gathering contractor information, and addressing outstanding questions, you set your business up for success. Don’t forget to reconcile accounts, review assets, verify payroll, and plan for estimated taxes. These steps not only ease the tax process but also help you better understand your business’s financial health. For additional guidance, consult the IRS Small Business and Self-Employed Tax Center.