Hello lovely clients! If you haven’t already started gathering things together for tax time, consider this your friendly reminder that it’s time to get me your important papers. We’ll break down what exactly I mean by that.
1. Collect Important Business Documents
It goes without saying, you need to be tracking income, cost of goods/services sold, and expenses. This should be part of your accounting process (quickbooks, etc). If you opened new bank accounts, credit cards, investment accounts: make sure you’ve let us know and include those new statements in your business documents. This will enable us to help you find each and every deduction you deserve.
If you organize your documents and receipts as they come in, you can avoid unnecessary stress around this time.
2. Create a Filing System for Business Documents
We highly recommend setting up a simple but comprehensive filing system (along with paper files, if not all documents are digital) to file and categorize your documents. This is to ensure you have all documents, including bank statements, contracts, and pay stubs, on hand when we ask you for them.
This system should work for you and make things convenient by allowing you to document every dollar your business earns and spends. This will come in handy in the rare event you’re audited—then you can back up your deductions and claims to the IRS.
Another important tip here is to keep your business accounts separate from your personal accounts. Avoid commingling bank and credit card transactions, particularly if you have multiple businesses. Each business is its own entity, which needs its own separate filing system, credit cards, bank accounts, and so on. If you have any paper receipts, separate them according to the correct business entity and scan them in.
Taking these precautions will be easier and less stressful for you in the long run. You won’t miss quality deductions and save yourself from paying more in taxes.
3. Check in with your Accounting System
If you haven’t already invested in an accounting system like Quickbooks, do so—or we can help you do so. This makes staying organized for the tax season very straightforward.
On the other hand, if you already have a properly set up computerized accounting system, ensure it’s up to date and reconciled (and reach out to us if it’s not).
Make sure you’re leveraging the support you need and want by reaching out to us. We can support your business at varying stages to ensure your accounting is mirroring how your business evolves, and that all your financials are completed in a timely manner. Contact us to see if your current system doesn’t work for you or if you need to upgrade your current accounting system (if you’re using something like Excel to track your transactions).
4. Plan Ahead to Pay Taxes
If you’ve been working with us for a while, you saw that towards the end of the year (November-December) we sent you your estimated tax liability for 2021. The figures, of course, are just estimates; you need to update us on what changes happened in your business last year/this year that might impact your tax filing. This will allow us:
- to calculate your tax estimates for 2022;
- give you advice regarding your financial and computerized accounting systems; and
- discuss the appropriate deductions and planning for your business.
In a nutshell, we want you to keep us up-to-date about all your finances and inform us about any changes that have happened—or will happen—in your business this year.
These tips can help you stay organized for tax filing without the stress, but we’ll always be there to guide you along the way to ensure tax season 2021 is smooth sailing.
Take Control of Your Finances with Monarch CPA
Monarch CPA is an accounting and tax firm that believes in empowering taxpayers to understand their numbers.
You can rely on us to accurately file your taxes in a timely manner and also help you understand your business better and make smarter, more strategic decisions. Get in touch with our dedicated team of tax specialists to help you grow in revenue and financial literacy knowledge—and always be ready for tax season.