As the year draws to a close, businesses must turn their attention to closing their books and preparing tax documents. This process can be overwhelming, but with a proactive approach, you can make it easier for your bookkeeper and tax accountant to get everything in order efficiently. By organizing your financial records and communicating effectively, you can streamline the year-end financial close and ensure accurate tax filings.
Here are the best ways to help your bookkeeper and tax accountant prepare for end-of-year financials and taxes.
1. Keep Your Financial Records Organized
A well-organized financial record-keeping system is the foundation of a smooth tax season. Ensure that:
• All income and expenses are categorized correctly in your accounting software.
• Bank statements, invoices, receipts, and payroll records are stored and easily accessible.
• Digital copies of key documents are available in case of audit or review.
2. Reconcile Bank and Credit Card Statements
Your bookkeeper will need to reconcile all accounts to ensure that your records match your bank and credit card statements. Before providing documents to your accountant:
• Ensure that all transactions are recorded and categorized correctly.
• Address any discrepancies between your books and bank statements.
• Verify that outstanding checks and deposits in transit are accounted for.
3. Review Accounts Receivable and Payable
To ensure accurate reporting, you should:
• Confirm that all outstanding invoices have been sent and payments recorded.
• Follow up on overdue invoices to improve cash flow before year-end.
• Verify that all expenses, vendor bills, and reimbursements are recorded correctly.
4. Check Payroll and Employee Records
Payroll is a major component of your financials, and ensuring compliance is critical. Make sure that:
• Employee wages, bonuses, and benefits are recorded accurately.
• Payroll tax filings and withholdings are up to date.
• Independent contractor payments are tracked properly for 1099 reporting.
5. Gather Necessary Tax Documents
Your tax accountant will need various financial documents to prepare your returns. These may include:
• Profit and loss (P&L) statements
• Balance sheets
• Payroll tax filings (W-2s, 1099s)
• Business expenses categorized for deductions
• Loan and lease agreements
• Depreciation schedules for fixed assets
6. Review Fixed Assets and Depreciation
Your accountant will calculate depreciation on business assets, so ensure that:
• All asset purchases and disposals are recorded accurately.
• The depreciation schedule is updated to reflect any new assets.
• You’ve accounted for any potential tax benefits from asset purchases.
7. Consult with Your Tax Accountant Early
Don’t wait until the last minute to meet with your tax professional. A year-end consultation can help you:
• Identify potential deductions and tax-saving strategies.
• Understand any changes in tax laws that may impact your business.
• Plan ahead for estimated tax payments and avoid penalties.
8. Prepare for Tax Filing Deadlines
Understanding tax deadlines will help you avoid late fees and penalties. Important deadlines to keep in mind include:
• January 31: Deadline for W-2s and 1099s to be sent to employees and contractors.
• March 15: Tax deadline for S corporations and partnerships.
• April 15: Tax deadline for sole proprietors, single-member LLCs, and C corporations.
9. Review for Errors Before Submitting to Your Accountant
Before handing everything over, take time to review your books for errors. Check for:
• Duplicate transactions or missing expenses.
• Misclassified expenses that could affect tax deductions.
• Unusual variances in income and expense accounts compared to previous years.
10. Use Accounting Software to Streamline the Process
Modern accounting software like QuickBooks, Xero, or FreshBooks can simplify bookkeeping and tax preparation. These platforms:
• Automate bank reconciliations and categorization.
• Provide real-time financial reports.
• Allow easy collaboration between business owners, bookkeepers, and tax accountants.
Final Thoughts
Preparing for year-end financials and tax filings doesn’t have to be stressful. By staying organized, reconciling accounts, and communicating with your bookkeeper and tax accountant early, you can ensure a smooth tax season and avoid costly errors. Proactive preparation will not only help you stay compliant but also position your business for a strong financial future.
Need help getting started? Reach out to your bookkeeper or accountant today and start preparing now!
Post written by AI, Approved by 3PB
Three Pillars Bookkeeping and Business Services
763-464-6408, Office@threepillarsbusinessservices.com
Here are the best ways to help your bookkeeper and tax accountant prepare for end-of-year financials and taxes.
1. Keep Your Financial Records Organized
A well-organized financial record-keeping system is the foundation of a smooth tax season. Ensure that:
• All income and expenses are categorized correctly in your accounting software.
• Bank statements, invoices, receipts, and payroll records are stored and easily accessible.
• Digital copies of key documents are available in case of audit or review.
2. Reconcile Bank and Credit Card Statements
Your bookkeeper will need to reconcile all accounts to ensure that your records match your bank and credit card statements. Before providing documents to your accountant:
• Ensure that all transactions are recorded and categorized correctly.
• Address any discrepancies between your books and bank statements.
• Verify that outstanding checks and deposits in transit are accounted for.
3. Review Accounts Receivable and Payable
To ensure accurate reporting, you should:
• Confirm that all outstanding invoices have been sent and payments recorded.
• Follow up on overdue invoices to improve cash flow before year-end.
• Verify that all expenses, vendor bills, and reimbursements are recorded correctly.
4. Check Payroll and Employee Records
Payroll is a major component of your financials, and ensuring compliance is critical. Make sure that:
• Employee wages, bonuses, and benefits are recorded accurately.
• Payroll tax filings and withholdings are up to date.
• Independent contractor payments are tracked properly for 1099 reporting.
5. Gather Necessary Tax Documents
Your tax accountant will need various financial documents to prepare your returns. These may include:
• Profit and loss (P&L) statements
• Balance sheets
• Payroll tax filings (W-2s, 1099s)
• Business expenses categorized for deductions
• Loan and lease agreements
• Depreciation schedules for fixed assets
6. Review Fixed Assets and Depreciation
Your accountant will calculate depreciation on business assets, so ensure that:
• All asset purchases and disposals are recorded accurately.
• The depreciation schedule is updated to reflect any new assets.
• You’ve accounted for any potential tax benefits from asset purchases.
7. Consult with Your Tax Accountant Early
Don’t wait until the last minute to meet with your tax professional. A year-end consultation can help you:
• Identify potential deductions and tax-saving strategies.
• Understand any changes in tax laws that may impact your business.
• Plan ahead for estimated tax payments and avoid penalties.
8. Prepare for Tax Filing Deadlines
Understanding tax deadlines will help you avoid late fees and penalties. Important deadlines to keep in mind include:
• January 31: Deadline for W-2s and 1099s to be sent to employees and contractors.
• March 15: Tax deadline for S corporations and partnerships.
• April 15: Tax deadline for sole proprietors, single-member LLCs, and C corporations.
9. Review for Errors Before Submitting to Your Accountant
Before handing everything over, take time to review your books for errors. Check for:
• Duplicate transactions or missing expenses.
• Misclassified expenses that could affect tax deductions.
• Unusual variances in income and expense accounts compared to previous years.
10. Use Accounting Software to Streamline the Process
Modern accounting software like QuickBooks, Xero, or FreshBooks can simplify bookkeeping and tax preparation. These platforms:
• Automate bank reconciliations and categorization.
• Provide real-time financial reports.
• Allow easy collaboration between business owners, bookkeepers, and tax accountants.
Final Thoughts
Preparing for year-end financials and tax filings doesn’t have to be stressful. By staying organized, reconciling accounts, and communicating with your bookkeeper and tax accountant early, you can ensure a smooth tax season and avoid costly errors. Proactive preparation will not only help you stay compliant but also position your business for a strong financial future.
Need help getting started? Reach out to your bookkeeper or accountant today and start preparing now!
Post written by AI, Approved by 3PB
Three Pillars Bookkeeping and Business Services
763-464-6408, Office@threepillarsbusinessservices.com