Bookkeeping services in Troy, NY

With tax season right around the corner, small businesses are preparing for tax season 2020 and getting their books ready to deliver to their tax professionals. Some companies simply hand over their books to their CPA and let them go to work. Others spend time trying to make sure their books are clean before handing them off to their accountant. However, the simplest way to prepare for tax season is to have a checklist to prepare your books quickly and efficiently for your tax professional.

Follow this year-end checklist when preparing for tax season 2020

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While all businesses don’t operate the same way, there are some tasks that all businesses should go through when preparing for tax season. It begins with making sure your books are clean throughout the year. Performing tasks like monthly reconciliations and reviewing open accounts receivables will ensure that your bookkeeping is always up to date and will provide you with the information you need to assess your business performance. Let’s look at a year-end list that will help you when preparing for tax season.

W-9 2020

The W-9 is a form used to collect information about your vendors so that you can determine how their entity needs to be handled with regards to reporting income to the IRS. Any vendor that is a single-member LLC or has not incorporated, the IRS requires you to submit a 1099 if you have paid them $600 or more throughout the calendar year. As a best practice, all businesses should keep a W-9 form on file and track their spending with vendors that are single-member LLC’s or are not incorporated.

We include this as a year-end task when preparing for tax season because it ensures that you review your vendor files at the end of the year and collect any outstanding W-9’s that you don’t have on file and may require a 1099. Throughout the year, it’s extremely helpful to make sure you have a W-9 for any new vendor before starting any work with them

Form 1099

As mentioned earlier, you must file 1099’s for any single-member LLC or individual with whom you spend $600 or more throughout the calendar year. 1099’s must be filed on or before January 31 each year. In 2021, this date is February 1 because January 31 falls on a Sunday.

To make this process efficient, it’s essential to have W-9’s on file for vendors that require 1099’s. If you can track these vendors in your computer system, it is easy to create a report for 1099’s, prepare and file them. This is an area the QuickBooks does a very nice job. If you use QuickBooks Online, you can easily track the spending of your 1099 vendors and file the 1099’s electronically. It may seem like a confusing task, but it’s straightforward, and most bookkeepers will perform this service for you.

Reconcile Accounts

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Reconciling your bank and credit card accounts is a process that all businesses should be doing every month, especially when preparing for tax season 2020. If you don’t reconcile monthly, your financial statements may be incorrect. However, I tax professional cannot prepare a tax return without bank and credit cards reconciled at year-end. Reconciling is a process that many business owners struggle with and therefore leave it to their CPA to perform before completing the tax return. This causes delays in completing the tax work and adds to the cost of preparing the tax return.

The best alternative is to have the reconciliations performed every month so that your books are clean and tax ready at the end of the year. That said, this process can be done for you by a virtual bookkeeper so that you can focus on growing your business.

Year-End Report

There are a few year-end reports that you will want to review and make adjusting entries. Adjusting entries are used to adjust balances in your accounting system that may not be accurate. An excellent example of this is old invoices that the customer will not or cannot pay. These invoices should be adjusted to bad debt, so they do not continue to show up in your active accounts receivable balance. Another good example may be depreciation. If you have not entered depreciation monthly for your fixed assets, you will need to create an adjusting entry to reflect this. You may also need to enter interest expense that may have been missed. Last, look for any uncategorized expenses and make sure they have been booked to the proper expense category.

This list of year-end reports will vary for each business. It’s essential to speak with your CPA to determine the reports you need to run and what transactions you will need to review to ensure you have clean, tax ready books before sending your financials to your accountant. Preparing for tax season 2020 will facilitate the process and time spent with your CPA.

Making the Year-End Easy

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Year-end doesn’t have to be frustrating and time-consuming, but it does take a bit of planning. At Expex, we help our clients prepare for year-end by delivering tax ready financial statements every month. We also work with their CPA’s to create the reports they need to provide insights into their business to identify issues throughout the course of the year quickly. The best way to have a shortlist at the end of the year is to have your bookkeeping up to date on a daily, weekly, and monthly basis.

Expex is based in Schenectady, NY, offering convenient and innovative bookkeeping services to help your business succeed. Our application, Carly, can do everything a traditional bookkeeper does and more. This financial management program expertly fulfills services such as bill payments, bank and credit card reconciliation, and financial records consolidation. Call (518) 389-2305 today to get started, or contact us to learn more about Carly.

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