We have made it to another holiday season. Can you believe it? With busy travel plans and copious amounts of good eating, it’s also time to start working on end-of-the-year tax preparation for business owners. It’s prime time to start wrapping up your accounting books. Below we have the perfect checklist to help business owners start with their year-end tax planning.
1. Start early and maximize deductions.
The earlier you begin with the year-end taxes, the better off you will be when filing. Make sure that transactions are categorized adequately from the past year when maximizing deduction. This can quickly be done in QuickBooks by running a P&L (which will help provide information about whether your company can generate profit by increasing revenue) and a balance sheet (which helps report your company’s assets, liabilities, and shareholder equity).
2. Have contractors? Classify correctly.
When using the services of an independent contractor, it is not required to provide them with employment benefits, as they are providing services as a non-employee. Their payer must correctly classify each payee as an independent contractor or employee. As for this, clients must issue 1099-MISC forms to their contractors if the amount paid warrants that expense. In addition, it is important to make sure you have collected their W-9 forms before issuing any payments. If you have not done this, now is the time.
3. Check Forms and Statements.
Business owners need to make sure that all W-2 employees’ annual payroll tax forms have been filed and/or paid. In addition, owners must make sure that all bank accounts are properly reconciled and are in balance. This is to help create a statement that outlines deposits, withdrawals, and other activities that could have affected the bank account during a period.
4. Double check your PPP Loan.
Since COVID-19, many small businesses have received the PPP loan. With that being said, if loans are forgiven, a proper journal entry should be made to close it out. Make sure that all paycheck protection program (PPP) loans are properly set up in the books. Need additional help with this? We have two other PPP blogs on our website that can help.
Are you interested in learning more about ShoreSource Business Solutions, LLC?
Feel free to reach us at 843.729.2961 or firstname.lastname@example.org.