Business Tax Preparation for Next Year

Posted on March 1, 2016

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What You Can do Now to Make Next Year’s Business Tax Preparation Easier

business tax preparationIt’s tax season, and even if you outsource your tax return and bookkeeping to an accountant, you are likely still busy this time of year. Sorting out your papers and receipts and talking with your accountant requires a significant time investment for your business tax preparation. If you’re preparing your own return, you’re likely spending a lot of time making sure you have captured every expense and every penny of revenue to present an accurate income on your return.

There are some changes you can make this year to make business tax preparation a year from now much easier. Here are a few ideas for streamlining your tax preparation process:

Do a little tax preparation each month. You know how hard it is to try to make sense of receipts from 10 months ago. Instead of using the shoebox filing method, take some time each month, or even week, to match receipts with expenses and keep your paperwork organized. A year from now, you’ll be glad you’re not sifting through receipts, trying to remember what you purchased and why. Record a few notes in your accounting system or a diary, which are both helpful records should you ever be audited or if your accountant needs additional information.

Watch out for ghost assets. A ghost asset is an asset such as inventory or an asset that cannot be accounted for because it is physically missing or is not useable. This can be solved by using an inventory management system that carefully monitors inventory levels and prepares you for end-of-the-year reconciling of what’s in your system versus what’s on your shelves. Ghost assets can have a significant impact on your bottom line, so be aware of any inventory that seems to have grown legs.

Be sure that you are capturing all of your deductions. Besides equipment and office supplies, there are expenses that occur in your regular business processes that, when applicable, provide a significant deduction on your business tax preparation. For instance, if you use a home office or use your vehicle for business purposes, you may be able to deduct a portion of your utilities, fuel and maintenance costs, respectively.

Use a company credit card. You should be keeping your personal funds separate from your business accounts. However, you can take it a step further and use a company credit card. Then simply keep a small folder in your car or desk to collect receipts. You’ll receive a categorized bill that makes it easy to match expenses to receipts.

Outsource your accounting. There are obvious benefits, such as not having to set aside time to wade through bookkeeping tasks and business tax preparation. However, you will quickly realize that hiring an accountant not only takes care of your financial management but gives you the insight of an experienced specialist that works with many companies like yours and can provide guidance and advice about business decisions.

At AccuBiz, Bert Doerhoff, CPA and his staff work with small- to medium-size companies to not only provide bookkeeping and accounting services, but also to partner with them as they make decisions and analyze potential business changes. If you are interested in more information about AccuBiz, set up an initial consultation today.

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