Start Early For Tax Season

IT IS BETTER TO START EARLY
Believe it or not tax season is just around the corner and it is time to get your books in order. If you haven't done so, set aside a few hours each week over the coming month to catch up before year end and identify possible tax savings. If you're not sure where to start, you can begin with the following five easy steps.
1. Determine where your money came from. Gather all the sales register tapes, invoices, and customer receipts to calculate sales for the year. This will help you to record deposits listed on your business bank statement. Without this information you could misclassify transactions such as owner investments and loans received as income. Doing this will cause you to be taxed on non-income related deposits.
2. Find out where your money went. Pull out your receipts for business purchases. They will show expenses incurred and paid as well as debt incurred and payments for lines of credit and loans. Any funds used to buy furniture, equipment, and other business assets must be included because of the special treatment they have for depreciation purposes.
3. Once you have the paper receipts ready for processing, you will need all bank, credit card, and loan statements to date. You need this information for a few reasons. First, it will paint an accurate picture of your company's performance. Without it you miss out on allowable tax deductions and higher profits.
4. Remember the non cash items. Other items that you will need to track are donations to tax-exempt organizations. Be sure to locate receipts for the charitable donations. These transactions often include items such as furniture, equipment, and in-kind services.
5. You'll also need a record of automobile mileage incurred in the course of business and for charitable purposes. The best way to track mileage is by using a mileage log. You can find one online or at your local office supply store. Be sure to have this information at the time of your tax appointment.
Now that you have a simple process for preparing ahead for tax filing, get started. Waiting until the last minute can be costly in terms of accounting and tax fees, penalties, and missed tax deductions. Build a lasting and profitable business with good financial management and remember that bookkeeping is a critical piece of the puzzle.