Have you started organizing your accounting records yet? Year-end if fast approaching and many business owners are busy gearing up to the upcoming tax season. Many individuals feel a bit overwhelmed and nervous when dealing with the IRS, and that is perfectly understandable. Below is a bookkeeping year-end checklist that can be used by business owners, freelancers and contractors to help you feel better prepared for tax season.
Reconcile your bank accounts by making sure all entries have been recorded and match your bank statements. Research, identify and resolve any discrepancies before the end of the year so that no bank fees or erroneous charges are spilling over to next year.
Make sure you have properly billed all your clients, if you have any work or shipments for which you have not yet sent invoices, this is the time to get that particular task completed.
Catch up on your receipts and expenses, record every transaction related to your business no matter how insignificant it might be.
Double check all transactions, make sure you have recorded everything and ask someone else to also check your entries.
Categorize your records; I like to create files by vendor and client. I also like to create accordian files for receipts by month. If you are unsure how to categorize your records or need help, a professional bookkeeper can be a great resource.
Have you kept a detailed log on the number of miles you drove for business purposes? If you haven’t, it is time to start consider recording those miles and continue doing so all year long. The IRS allows you to deduct approximately $ .535 (2017) per mile for business trips, but you most have detail records in the event of an audit.
Make sure you have collected all W-9 forms from contractors you paid this year. To properly file a 1099 form, you need accurate taxpayer identification information; therefore, you must request a W-9 form from your contractors. 1099s should be sent to recipients no later than January 31.
To avoid penalties when taxes are due, be sure you have paid enough estimated taxes for the year. With the fourth installment of estimated taxes (due by January 15th) your total estimated taxes paid should be at least 90% of what your final taxes are for the year. Therefore evaluate if you have paid enough estimated taxes before the fourth installment, and adjust accordingly in order to avoid fees and penalties.
Generate a Profit & Loss statement before the end of the year and make sure the numbers make sense, evaluate each line and identify any possible discrepancies and anomalies before the end of the year.
Prepare a budget for next year; get your business started in the right direction by evaluating your current year performance and thinking about next year’s goals. Then create a budget that will reflect those goals and every month compare your actual results vs. your forecasted totals. This will allow you to be in control over your business performance. Budget preparation can be intimidating, therefore work with your bookkeeper to develop a budget for your business needs.
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