Year-End Bookkeeping and Tax Filing Preparation
Can you believe it’s the end of the year? If you are not regularly having your bookkeeping completed, now is the time to do so in order to have your work current and ready to send to your CPA early in 2022. Even if you plan to file an extension, it’s important to know how much tax would need to be paid as failing to do so by your due date (March or April depending on your entity type), will result in penalties and interest for failure to remit timely.
In order to be prepared, make sure to gather the following information for your bookkeeper:
Bank statements
Check register or check stubs (if not included on your bank statement)
Bills, especially if filing on an accrual basis
Deposit information
Sales information
Accounts receivable information
Accounts payable information
And information about other transactions such as loans, credit card statements, and any other items that need to be entered to accurately reflect what happened in your business
Review all information for completeness before handing it over to your bookkeeper. They will then be able to reconcile your bank and credit card accounts, record cash receipts and disbursements, adjust your accounts payable, and correct entries as necessary.
Adjustments to be made include:
Writing off uncollectible accounts receivable
Gains or losses
Prepaid asset amortization
Depreciation
interest expenses
Once the information is processed, your bookkeeper will prepare your financial statements including:
Balance sheet
Income Statement (also known as a Profit and Loss Report)
General ledger
Other reports as needed by your business
The importance of accurate financial information cannot be overstated. Bookkeeping helps you to evaluate your business as well as make tax return preparation easier. It allows you to determine what’s working as well as what’s not working. Strong and reliable financial records are just as important when dealing with tax compliance checks.
If filing on a cash basis, expenses will be recorded when paid and income when received. For accrual basis, expenses are tracked from the date of the bill and income from the date of the invoice whether or not payment has been made or received. So if you file on an accrual basis, it is imperative that all information for outstanding bills and customer invoices be included in what is provided to your bookkeeper for accurate tax return preparation.
If you have any questions about what is needed for your specific situation, reach out to your bookkeeper or CPA to make sure everything is accounted for properly.
