Year-end is just around the corner, and that means a couple of administrative tasks are necessary to take care of bookkeeping and tax chores. Here are a couple of tips to make year-end go smoother.
Things will go much smoother if you reach out to your vendors and employees to help you update your records.
- Send a notice to all employees, asking them to verify their address so they will get their W-2s without delay.
- Make sure you have the right information for vendors that you need to produce a 1099 for. Before you pay your vendors more than $600 in one year, ask them for a W-9 so that you have a current address and taxpayer ID number on file.
- Check to make sure you have any sales tax exemption certificates from vendors that you aren’t charging sales tax to.
It’s also time to clean up any account balances that you need to reclassify or correct.
- Any clearing accounts, such as undeposited funds, should be zero.
- Make sure to catch up on your bank reconciliations, and book balances should match the bank or be explained.
- Adjust your inventory to reflect accurate quantities.
- Also adjust your loan balances to correctly reflect interest and principal allocations.
- Make any necessary depreciation entries.
Here are a just a few ways to maximize deductions:
- You can write off any bad debts you don’t expect to collect.
- You can also adjust any inventory on your books that you can’t sell or is worth less than what you paid for it.
- For cash basis taxpayers, pay any large bills before year-end if you have excess profits.
- Pay employee bonuses prior to year-end.
Create a place in your home, office, or computer to store tax-related documents, like W-2s, brokerage statements, and tax returns. Convert them to PDF format if they are not already (sites like SmallPDF can help with this), and upload them to your accountant’s secure client portal as you get them.
With all this great preparation, you’ll find tax season easier than ever and a chore that you can mark off your to-do list early. And contact us at Innovative Financial Services, LLC today if you need help.