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How to Prepare for Your Tax Appointment

January 24, 2017 by Deb Howard Greenleaf

How to Prepare for Your Tax AppointmentJanuary means a new year … and time to report your business income for last year! Filing taxes isn’t fun and nobody actually looks forward to it. This annual ritual doesn’t have to be a painful experience, though. Being prepared saves a ton of time and will help the process move along more smoothly. While you’re waiting for those last forms to arrive, you can start assembling some records for your tax preparer. Better organization means a faster turnaround from a happier accountant … and possibly a lower bill from your accountant!

 

  • Income records — You don’t need to bring your tax preparer a copy of each check you deposited or a copy of every invoice that was paid! Rather, you should be prepared to bring a summary of those sales that is detailed enough for your tax preparer to understand your business. If your customers report your payments on 1099-MISC forms, be sure to bring them with you! Remember that you have to report all income that you earned, whether you received a 1099-MISC form for it or not.
  • Other income — Don’t forget to bring any documents you received reporting Interest  or Dividend income you may have earned on your business bank accounts.
  • Expenses — Prepare a summary of how much you spent on each category of business purchases, including Office Supplies, Advertising, Postage, Travel Expenses and so forth. Try not to leave anything under the Miscellaneous Expense category! By the time you’re done, your summary should account for all business expenses for the year.
  • Equipment purchased & sold — If you bought a new computer or other equipment for your business over the past year, you’ll need to give your tax preparer details on the date, amount paid and description of the equipment. Likewise, if you sold or trashed some of your old equipment, you’ll need to make a note of what was sold or disposed of, the date, and how much (if anything!) you were paid for it.
  • Vehicle log — Whether you’ve been tracking your business mileage with pen and a paper log or using the latest mileage app, you’ll need to provide your tax preparer with several crucial numbers: total miles driven during the year and how many of those miles were driven for business. As with much of your information, you don’t need to give your tax preparer your actual mileage log, but you will need to have an actual log and keep it available in case your tax preparer has questions or in the event of an audit.
  • Home office expenses — Claiming a home office deduction is not the red flag that it used to be! Simply write down the total square footage of your home office, the total square footage of the entire home and the amounts paid for rent or mortgage interest, utilities, homeowner’s insurance and other home office expenses. In the event of home office expenses like internet access, be prepared to bring at least one complete monthly statement so your tax preparer can see the details. To make life even easier, you could always claim the simplified deduction which lets you claim $5 per square foot for your home office. This option is especially appealing if you neglected to save all those utility bills all year long!
  • Inventory listing — If you carry inventory in your business, be prepared to bring a detailed listing of year-end inventory counts and values as well as a summary of how much you paid for your inventory throughout the year. Your tax preparer will need to know how much you paid for the inventory left on your shelves as of year-end.
  • Forms you prepared — If you issued 1099-MISC forms to independent contractors for last year, be sure to bring a copy of those forms, too!
  • Return copies — If this is your first year with a new preparer, be sure to bring a complete set of last year’s tax return with you. It will save a ton of questions and time!

 

Running a small business is hard and tax time can be frustrating. Contact us today if you’d like the help of a professional bookkeeper in your business!

 

Have any questions about what to bring to your tax preparer? Please share them in the comments below!

Deb Howard Greenleaf
Deb Howard Greenleaf

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.

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Filed Under: 1099 Reporting, Best Practices, Bookkeeping, Greenleaf Accounting, Small Biz Taxes

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