DOWN TO BUSINESS
A look at small business questions from the Southwestern Oregon Community College Small Business Development Center (SBDC).
By Arlene M. Soto CMA, CGBP, Southwestern SBDC Director
It’s been nearly a year since I did business taxes. What do I need to do to prepare for tax time?
It is once again the end of the year and time to start thinking about preparing business taxes and sending out employee W-2 forms. Now is the time to think about whether you will hire a tax preparer or do your own business tax returns. Either way, there is information that needs to gathered.
Many small business owners use haphazard recordkeeping systems and find themselves disorganized at the end of the year. A shoebox full of receipts can take hours to sort and total to prepare a tax return which adds costs to tax return preparation and doesn’t provide information for decision making during the year. Often small business owners neglect to include receipts for cash purchases they have made on behalf of the business, losing out on tax deductions that can save them money. It’s a good time to make sure all receipts are organized and all transactions have been entered into the accounting system.
Most tax preparers have a checklist they provide to clients to help them get ready for tax preparation. Some of the information that will be needed:
- Prior year tax returns both federal and state;
- Financial statements including profit and loss, balance sheet, general ledger, accounts receivable and payable ledgers and a trial balance;
- Bank and credit card statements;
- Detailed list of inventory;
- Loan amortization and balances;
- W-9 forms for vendors needing 1099 forms;
- Detailed payroll records for W-2 and year end payroll tax reporting;
- Detailed list of assets purchased or disposed of during the year including prior depreciation;
- Vehicle usage.
Having all the information a tax preparer needs will save time and money. Having all the information necessary to do your own taxes will save time and headaches.
December is the time to start collecting all the information that will be needed. It’s also a good time to review deadlines and due dates for all tax reporting to make sure none are missed since penalties and interest can be very expensive. If you haven’t done a good job with recordkeeping this year, December is a good time to look at new recordkeeping options to get a fresh start in January.
The SBDC is a partnership of the U.S. Small Business Administration, the Oregon Small Business Development Center Network, the Oregon Business Development Department and Southwestern Oregon Community College. Arlene M. Soto has been the Director of the Southwestern Small Business Development Center since July 2007. To ask a question call 541-756-6445, e-mail firstname.lastname@example.org, or write 2455 Maple Leaf, North Bend, OR 97459. Additional help is available at the OSBDCN Web page www.bizcenter.org.