Operating your small business requires a great deal of your time and attention. In addition to taking care of your customers, there are those day-to-day responsibilities that are necessary to keep the business functional. Managing inventory; ordering supplies; paying vendors along with other tasks is already a full load. Try adding bookkeeping to the list and there goes your time.
Accounting and bookkeeping are very important functions in the business; therefore, every effort should be made to manage the books and to produce accurate reports. At year-end the books have to be closed-out to get ready for tax preparation. Before doing so, business owners and their accountant should work closely together to ensure that all items of income and expenses are accurately accounted for, classified and recorded.
Here are a few tips to help you along, particularly if this is your first year in business:
- Start-up costs – Purchasing items such as furniture and equipment to start a business can be quite costly. For this reason, business owners can deduct most of them on their tax return.
- Spend-downs – Since expenses are generally deductible in the tax year incurred, now will be a good time to make last minute purchases. If your business has any unspent grant funds, you may want to use them now but make sure that the expenses are necessary and relevant for your business.
- Analysis & Reconciliation – In the busyness of the day-to-day, it is very common that some transactions may either get omitted from the books or misclassified. Take the time to perform a thorough analysis of the general ledger.
- Estimated Taxes – If you are required to make quarterly estimated tax payments, now will be a good time to review as January 18, 2022 is the next due date. If you file your tax return by January 31, 2022 and pay your full balance you can skip that fourth payment.
- Update Tax Forms – Review records for independent contractors whom you may have to issue 1099’s to. Make sure that you have accurate W9 forms for tax reporting and filing of informational reports to the IRS.
Depending on the nature and size of your business, there may be other year-end preparations needed but these are some of the common ones. This time of year can be quite hectic and it is very normal to become overwhelmed; therefore, it is highly recommended to seek help. In addition, knowing what financial reports and documents that are required for taxes is super important so seek professional advice when needed.
SLS Accounting & Business Consulting Services offers Accounting, Bookkeeping, Advisory and Tax Services year round. We serve individuals and small businesses, partnering with you to handle your business finances seamlessly. Our practice operates fully remote, utilizing cloud technology to keep your data safe.
Visit us @https://slsaccountingsvcs.com to learn more.