Mastering Year end Prep Part 2
“What is not started today is never finished tomorrow.”
- Johann Wolfgang von Goethe
Mastering Year-End Prep:
A Stress-Free Guide for Small Business Owners, Part 2
January is the official beginning of many things: the new year, new health resolutions, new beginngins, and let's not forget the dreaded "tax season."
It’s the time of year when bookkeepers, accountants, and tax professionals ramp up so they can handle the workload to come. I'll be honest, it's not pretty! There's a lot that happens between January 1 and April 15. The well organized people make it easy to manage. The rest of us? (Yes, I said us, because I tend to be a last minute filing kind of gal), well, not so much.
There is a lot of planning that goes into the season. Bookkeepers, accountants, and tax professionals spend four months navigating the anticiapted and the unexpected. They plan ahead to maximize thier time and, quite frankly, so should you.
Organizing now prevents scrambling as deadlines approach. As a bonus, your organized information will make your bookkeepers, accountants, and tax professionals very happy.
And FYI, tax preparation is NOT a service I provide. I admire the folks that do it and do it well. It's not my cup of tea. I filed my first tax return at the age of 15, a 1040EZ and the equivelent for the state of California. I sat at the kitchen table while the mother walked me through it. I had a job, so taxes had to be filed, and she wanted to make sure I knew how to do it myself.
I have filed my taxes ever since. I don't enjoy it. I have found that if I'm organized, it's less painful. There are a lot of things I'd rather do though!
January: Tax Planning & Record Keeping
1. Consult with a Tax Professional
What to Do: Tax laws change each year and it's important to be ready and have people on your team to support you. If you don't have a tax professional, now is the time to find one. Find one and set up a consult to ensure you’re up-to-date and leveraging all available deductions. It’s their job to be up-to-date and ready to support you. It's your job to be ready for them and not make thier job hard by waiting until the last minute.
When to do it?: ASAP! Ideally, you should meet with someone early Q4 so you can have your ducks in a row. Real life sometimes gets in the way and doesn't have that on the priority list.
Why It Matters: The sooner you an get in with someone, the sooner you can make a plan to get everthing together for your tax professional. You want time to get all of data together in an organized fashion so it can easily be handed off, even if that's a pile of well organized envelopes or a shoebox.
#PennysProTip: The earlier you can schedule that meeting, the process will go and the sooner you’ll have your ducks in a row.
2. Continue Organizing Your Records
What to Do: Set aside time each week to keep financial records updated. If you haven’t started using accounting software, now is the time.
Software Tip: If you've not already, consider using accounting tools like Xero, QuickBooks, FreshBooks or Wave to simplify your bookkeeping. Some businesses have simple needs that can be met with a spreadsheet in Excel or Google Sheets plus a cloud storage solution for the paperwork. Take a little time to decide your path so you can start the year fresh.
If you're not sure what option is best for your needs, you can schedule a 30-minute discovery call with me and I'll help you sort through them.
#PennysProTip: If you’re going to make a change in the type of system you’re using, do so at the beginning of the year. That way you don’t have to go to multiple places to pull what you need come year end.
3. Start Gathering Tax Forms
Required Forms: So. Many. Forms. You will need YOUR forms and if you have employees and/or contractors, forms for them too.
For You: Gather your Income Related Forms (W-2, 1099s from banks, investment companies, and payers including unemployment compensation, dividends, distributions from a pension, annuity or retirement plan. For a full list, please visit the IRS Website.
For Your Empoyees and/or Contractors: You need to file form W-2 for each employee and form 1099 for each contractor. Forms need to be submitted to the IRS and mailed to the individuals by January 31.
#PennysProTip: Keep all of your forms, letters, and statements for taxes together so you can easily grab that file when you need it. If you are using a bookkeeper, accountant, or service of some sort to file and mail your W-2s and 1099s, make sure you are in communication with them to ensure that they meet the January 31 deadline.
In Conclusion
If you've taken December to organize your financial records, review expenses, and ensure all your ducks are in a row, January will be easy! If not, that's ok, there's still time to line up those ducks. Ending January organized and with a solid plan is your goal.
Here's a sneak peak to what's coming in February and March:
February: Finalizing Records and Preparing for Filing
March: Filing Your Tax Return
Stay tuned for Part 3 next month, where we’ll dive into what you should focus on in February to keep the momentum going. Let’s make this your smoothest year-end yet!
January Checklist
click to download the checklist
What You Will Need to Gather in January for Taxes (in the US)
Other pertinent forms, see the IRS Website for the full list.
