It’s looming in the distance, but we can all start to hear the whispers and rumblings, letting us know it is well on it’s way: Tax Season will soon be upon us.
For some of us, that means paying a keen-eyed “numbers person” to sort through the receipt closet for us. For others, it means rolling up our sleeves, pulling out the calculator, and beginning a very headache-inducing adventure through the past year’s income and expenditures.
Like any adventure, taking time to prepare can make all the difference between setting out on a grueling struggle through harsh wastelands of malevolent storms, or a gentle meander through a sunny, open glade with butterflies and baby fawns. Preparing some of the following documents will dramatically mitigate the struggle of preparing your 2016 tax return.
Tax Season: Preparation
First, and foremost, locate the previous years tax return. This will be useful for some of your businesses technical information, such as your TIN (Tax Id Number), the date of your business incorporation, your business code/activity, and you starting sheet amounts (last year’s ending amount).
Next, you’ll want to hunt down your accounting records. You will want to create a profit and loss spreadsheet, as well as a balance sheet. This can be done easily if you use accounting software (such as Quickbooks or Quicken) by printing off a report, or you may need to create your own excel/etc. spreadsheet.
A vital piece to making this journey a success is having your banking statements in handy and in order. Taking a look at your statements can help you categorize income and deductions for your tax form. You will also want to make sure your payroll reports are accurate and close at hand.
If your business owns any vehicles that are used by employees, associates, or shareholders, you’ll need to quickly jot down the vehicle mileage used for personal, business, and commuting.
Finally, make sure you have a list of you major asset purchases available; these will most likely need to be marked as ‘depreciation deductions’ over a period of time, and should include the following:
- Description of the asset
- Date put into service
- Original cost of the asset
- Accumulated depreciation up to this tax year
- Business use percentage (if applicable)
- Recovery period of the asset (3 years, 5 years, 7 years, etc.)
- Any Section 179 Expense (or first-year expense) taken in the first year of service
The time invested in preparing this information will make your tax preparation a much smoother and less hair-pulling endeavor. For more tips, and the original article on these (and more) ways to prepare for tax season, visit the link here: https://turbotax.intuit.com/tax-tools/tax-tips/Small-Business-Taxes/Business-Tax-Preparation/INF12001.html