Before we can focus on our bookkeeping and business goals for 2018, we really need to look back at 2017.
Other businesses are doing the same thing right now, so soon you’ll be receiving documents and forms you need to file your taxes. Make sure you gather everything up and file it somewhere you’ll be able to find easily.
What to start collecting:
If you’re receiving 1099s, they will start arriving late January. You’ll also want to keep an eye out for health insurance statements, bank statements, and any other important financial information.
When in doubt, file it. You can always toss or shred unneeded items down the road, but you don’t want to be scrambling to find that missing 1099 right before the tax deadline.
Hopefully, your books are already up-to-date and you can begin generating the necessary year-end information. If you are behind, now’s the time to catch up. Make sure your books are updated with ALL income earned in 2017 and ALL expenses paid in 2017. Once you’re sure everything is ready, it’s time to start generating information.
What to generate:
One of the most important statements you’ll need is your Profit & Loss (P&L) statement. If you’re sure your books are updated, generate your P&L and verify all information looks accurate. Check 2017’s numbers against previous years (and, ideally, your 2017 budget). What you’re looking for is any missing information. You’ll want to make any necessary adjustments as soon as possible.
You’ll probably be receiving 1099s soon, which means you need to be sending 1099s, too. Now’s the time to generate any 1099s you’re obligated to.
And, of course, you’ll want to make sure you get all your deductions ready. Which means calculating a few items.
What to calculate:
If you work from home, calculate the square footage of your home office. Keep in mind that the IRS says that the space you are using for your home office must meet the following requirements: (1) The business must be legitimate; (2) The space must be used as your principal place of business or for specific business purposes, like meeting clients or doing business paperwork, and (3) the space must be used “regularly and exclusively” for business.
You’ll also want to calculate mileage for 2017 as well. Ideally, you kept a notebook (or used an app) to track all your business mileage throughout the year. Remember that while your daily commute doesn’t qualify, most other trips (for a meeting, to visit clients, etc) do. If you chose to calculate actual costs of using your vehicle, you’ll need to calculate the percentage of time you use your vehicle for home vs business and gather all receipts (gas, maintenance, repairs).
If you find that these year-end tasks are taking a long time, you might want to consider handling things a bit differently in 2018. Later this month I’ll be sharing my tips and tricks for better bookkeeping in the new year, so keep an eye out for it. In the meantime, I’d love to hear what you include in your “To collect,” “To generate” and “To calculate” lists!
Deb Howard Greenleaf, EA, CEO and Principal, of Greenleaf Accounting Services provides virtual accounting and bookkeeping services and specializes in financial management to consultants, coaches, solo professionals, and other small business owners across the US. Deb is an Enrolled Agent (EA)—an IRS-licensed tax professional—and specializes in small businesses and entrepreneurs filing Schedule C or as an LLC. As an Advanced Certified QuickBooks ProAdvisor, Deb spends her day in QuickBooks Online and specializes in providing QBO support.
