Tis’ the Season for Tax Prep
Thanksgiving is over, and Christmas and a new year are just around the corner. 2022 will be gone in the blink of an eye, so now is the time to prepare for 2023 tax filings. That may spark feelings of dread, panic and even anger for some. Others have been through this too many times to count and have a veteran team assembled to make it a smooth, streamlined process. No matter how you feel, now is the time to prepare, so it doesn’t cost you in the long run.
Scan the checklist below to gauge areas where you are well-prepared and those that may need some immediate attention.
1. Inspect Books: Hopefully, you or someone else keeps your books regularly updated. But if not, now is the time to begin categorizing income and expenses, completing reconciliations and solving any discrepancies. It’s also time to obtain any missing information for vendors that must be issued 1099’s. If you have a bookkeeper—in-house or outsourced—now would be an excellent time to schedule a meeting to review the books and ask any questions.
2. Organize Documents: Once the books are in order, you should have the necessary statements to prepare your tax documents. Also, make sure to have a copy of your previous year’s tax returns, personal information, business records, tax payments and any 1099’s received. Make sure to have receipts of any business expenses you plan to deduct and any documents related to assets purchased or sold. Be sure your mileage log is accurate and up-to-date as well.
3. Assess Financials: Taking time at the end of the year to review your company’s financial health is a perfect opportunity to see how it’s performed. Taking a closer look at your balance sheet, income statement and cash flow statement can show where you had gains or losses and highlight areas that may need cutbacks. Also, be sure to compare them to previous years to see progress or to discover any financial issues that could cause significant problems in the future.
4. Large Purchases: If you want to maximize your deductions, you may consider making large, tax-deductible purchases before December 31. Office supplies, a new company vehicle or additional equipment offer some potential tax-savings opportunities.
5. Do not Procrastinate: We are all guilty of procrastinating at some point (or points) in our lives. But when it comes to year-end tax planning, that is the last thing you want to do. To avoid this trap, set aside time in your schedule now to accomplish your tax “to-do list.” Set important reminders so that nothing falls through the cracks. Trust me—this will make your start to a new year much less stressful.
While this is certainly not an exhaustive checklist of tax-preparation advice, hopefully, it will quick-start your end-of-year planning and leave you less stressed on January 1. Plus, it will give you an overall picture of where your business stands currently, thus giving you the ability to forecast for the New Year.