It’s that time of year again but I’m not talking about the holidays. I’m talking about tax season.
I know, who wants to think about that. Besides taxes aren’t due until April. Here are my tips that I share with my accounting clients around La Canada, Glendale, and Pasadena.
You only have till December if you want to do any tax planning, and for those who don’t need tax planning, you’ll be surprised how fast April rolls around when you’re busy running a small business.
Here are some steps to get you started to file a tax return efficiently.
If your financial records are stuffed in a shoebox (the pile of denial), start going through it and identify the following:
Cash transactions – these are items purchased with cash. Cash receipts are the only proof you have of the expense your business incurred. Separate them out and put them in similar categories, such as parking, fuel, and office supplies. Total each category.
Credit Card Transaction – collect all of your statements for the year. You will need to categorize each transaction by expense, same idea as the cash receipts. Total each category.
Bank Account Transactions – Collect bank statements the way you did the credit card records. Review the bank statements then categorize checks and debit transactions and get a total for the categories. Also, go through and categorize deposits that are income vs loans.
Business transactions paid by personal accounts. Sometimes, we forget the business credit/debit card and use our personal cards. Go through your personal credit card and bank statements and categorize the business transactions, and then total those up by category.
At this point an excel spreadsheet can be helpful. You can get a list of the categories you’ve created and enter the figures to come up with the grand totals.
To make it even easier, I’ll send you for free the template I use when you sign up for the blog or contact me through email.