Another year is coming to a close and it’s time to start thinking about the upcoming tax season. December might feel like it’s too soon to start working on taxes, but it’s an optimal time even if this is the busy season for your business in Concord, NC. Getting prepared now helps you create a strategy for taking care of your taxes if you have liabilities that you prefer to put off. Or you can get them filed and out of the way sooner than later.
It’s always a good idea to discuss what you need to do with your Charlotte, NC business accountant, but you can make her life a little easier by getting ready. Here are some things you should prepare for your accountant.
Your miscellaneous receipts from your spending over the year may help you reduce your tax liability. Whether you have the stereotypical box of receipts or you’ve scanned them into a file on your computer, you’re giving your accountant an additional option to find ways to help you pay less in taxes if you owe. You may have spent money on items that wind up being deductible, and your receipts are your proof.
Gross Sales Numbers
Your gross sales numbers from every month is the sum total of what you’ve sold before you’ve taken out your expenses. Giving your accountant these numbers helps her determine net profit for every month and come up with an amount for the entire year. This gives her a baseline number to work with as she starts working out the rest of the information you’ve given her.
Sometimes receivables don’t get paid before the year is out, but are entered into the receivables anyway. This is known as accrual accounting. Your accountant can help you determine if cash accounting or accrual makes more sense for your day-to-day operations and for tax purposes. Make sure she knows which bills are outstanding and which ones have been settled.
If you have income streams for the business that don’t fall into a category but are considered part of the business income, make sure to provide those sheets as well. You have to declare all income to the IRS, and you don’t want to get a letter from the agency if you fail to disclose income.
Current Inventory, Changes, and Purchases
If you run a business that sells physical items, you have to keep track of current levels, changes, and purchases you made to restock after sales were made. The accountant needs to match the inventory numbers with the sales as part of determining business profit. Also mark items taken out for personal use.
Supplies are always a purchase item and go towards reducing the gross sales number and profit. They may also qualify for a deduction depending on their intended use. The accountant can also gain an accurate picture of the profit per item based on the cost of the components. This does help with determining tax liability, but it can also uncover a potential avenue to increase profits.
Every dollar spent for the operation of the business is considered an expense. Some expenses include:
- Rent or mortgage
- Phone service
- Cellular phone service
- Computer equipment
- Business cards
- Legal expenses
Keep track of all money spent on behalf of the business even if you don’t think it’s necessary for taxes. You might be surprised to learn that some of your expenditures are deductible, and your Charlotte, NC business accountant can help you make the most out of them.
Getting ready for tax time sooner than later helps you get a handle on what’s going to happen next year for revenues, expenditures planned and unplanned, and strategies for improving sales going forward. And knowing how you’re going to handle your taxes helps you plan better for when you file.