You missed the tax deadline for your business and had to file an extension. What to do now?
Tax season can be very stressful time for small business owners. You’ve probably spent the year maintaining and growing your business and doing all the right things. But as an entrepreneur focusing on your vision, keeping track of accounting back office functions sometimes takes the back burner. So, you filed an extension, great! But you still must organize all your financial records for your tax preparation.
With these five tips and some breathing relaxation, you can get through it!
- List all your bank, credit card, payment processing accounts such as PayPal, Square and Shopify. By listing these accounts you can ensure you have all the key information to get your books ready. Also, if you will be using a bookkeeping professional, these are some of their first questions: how many bank accounts, credit cards and loans does your business currently have?
- Organize all forms of payment received from customers and payment processing accounts mentioned in point number 1, along with any 1099-K and 1099-MISC forms, etc.
- List any expenses or contributions made to your business that did not go through any of your financial accounts. This is important and very beneficial in tax preparation for your bottom-line. For example, you can include contributions of property or other expenses made at the time you were setting up the businesses and before opening a bank account. These expenses can include incorporation related expense, travel costs, meals, personal computer, office supplies including business-related Amazon orders. The best way to do this is to maintain a simple spreadsheet listing these expenses.
- We recommend looking through your personal bank and credit card statements and compile the list for review with your tax adviser to check the deduct-ability. You want to be as thorough as possible to avoid leaving out any deductions. Also, having an accurate record of what it costs to run your business will be valuable later when assessing profitability in making business decisions.
- This is also a great time to start thinking about systems. Do you need to consider a web software to help you stay organized or are you still operating properly using a spreadsheet program such as Excel? There are several free services such as WaveApps and other paid options such as QuickBooks Online and Xero. You don’t have to go through this selection alone. You can always count on us to guide these decisions to incorporate the systems that make the most sense for your small business.