You’re smack in the middle of the fourth quarter, and suddenly you realize that you’ve got receipts stored in three different places and your accounts haven’t been reconciled since April — or maybe March.
As the end of the year looms, you don’t quite know where you stand financially. Worse, you’re not sure what year-end moves you need to make for the best tax advantage.
Don’t panic. Follow this steps plan to get back on track.
1. GET ORGANIZED
Go on a search-and-retrieve mission to gather as many documents as you can. You may have accumulated transaction records in boxes, corners of your office, or even your email inbox. Download your bank statements and collect any copies of deposit slips or cheques you kept.
Once you have as much documentation as you can find, separate each receipt, invoice, or other record into income and expenses. Then, sort them by month. This will give you a chronological record of most or all transactions.
2. ENTER TRANSACTIONS
If your bookkeeping isn’t up to date, it’s hard to track whether your income and expenses are what they should be. Whether you work on this yourself or get help from an outsourced bookkeeping solution, get your general ledger up to date by listing all transactions. Once you have a comprehensive general ledger, you can create a profit and loss statement (P&L) to help you project operating costs and identify where to cut expenses or make investments.
3. CALCULATE INCOME
Next, review your revenue for the year. Is it up or down? Have your expenses held steady or have they increased or decreased? These top-line numbers will give you a sense of whether your tax liability may have changed this year and if you need to adjust tax payments accordingly.
4. REVIEW DEDUCTIONS
Starting in 2018, the Tax Cuts and Jobs Act of 2017 may affect your tax liability and several deductions. Some of the changes that could affect you this year include:
The corporate tax rate is now 21 percent.
Pass-through entities, including sole proprietorship's, partnerships, limited liability companies (LLCs), S-corporations, may deduct 20 percent of their qualified business income, if taxable income is below $315,000 for married taxpayers filing jointly, or $157,500 for single taxpayers. Those who earn more are subject to additional conditions.
Some business deductions, such as entertaining clients, are no longer allowed. You may still deduct business-related food and beverage costs up to 50 percent if they are not extravagant.
The new law temporarily allows 100 percent expensing for business property acquired and placed in service after September 27, 2017 and before January 1, 2023.
The new law also makes other changes that relate to equipment expenses, business interest deduction thresholds, and other areas.
5. GET HELP
As you prepare for the end of the year and begin to understand what the new tax law means for you, a qualified CPA can give you advice about the best moves to make before the end of the year, such as making purchases or qualified charitable donations, to give you the best tax advantages possible.
Business owners wear many hats and juggle an array of responsibilities. If bookkeeping is overwhelming or you need help getting your books in order in time to make the right moves for your financial situation, consider outsourcing. A reliable bookkeeping solution can help you maintain accurate and current records, while giving you more time to do what you do best: run a successful business. Need help prepping your books for tax season? Reach out for a free consultation.
Get In Touch With Us For Our Services!
We don’t just say it, we deliver – our work speaks for us! Contact us for a demo and opt for Our Online Bookkeeping Service for as low as $199 per month.
Cloud Bookkeeping, Inc.
5000 Birch St., West Tower Suite 3000
Newport Beach, CA 92660
Tel: (909) 952-3804
Email: info@cloudaccountingandtaxes.com
Website: www.cloudbookkeepinginc.com
Credits: Bookkeeping Express