Finishing Touches, V1I5

Making Tax Time Less Painful

ralph headshopIt is the end of 2015 and it is now time to think about 2016. As a shed builder, you have analyzed your 2015 data and have put your 2016 budget together and have started your planning for a better year than the last. There is still work to be done for 2015 that can make life less painful.

As 2016 rolls around, it is time to think about assembling your tax information and providing it to your preparer. This takes time, and hopefully your accounting records have been updated throughout 2015 by yourself, your staff, or your CPA. No matter who has completed this task, thorough and accurate records will save you money. The less time your preparer needs to compile your return, the less money you will be charged.

Your preparer will most likely send you a tax organizer sometime in January 2016. This organizer is a tool for your preparer to input the data into your federal and state returns. It is very important that as much information as possible is provided on this form to your preparer. With this information, your preparer can determine if there are additional issues that may apply to your overall tax situation and need to be addressed, either in the present or the near future.

From the information that you provide, your tax preparer can help you determine ways to improve your record keeping, so that you receive the necessary information to formulate your annual budget, streamline your chart of accounts, better track your expenses, and transform your accounting records into a tool to better run your business.

There also may come a time when consideration of your business entity status may arise.

A growing business may need to change its status based on certain asset protection, liability concerns, and tax advantages. A change from sole ownership to a corporate or partnership entity will necessitate a separate tax return for the new business entity. Your preparer can help you determine if a change will be necessary and/or beneficial.

In summary, your recordkeeping is the source for all things good and bad. Good records assist the owner to grow the business and produce relevant data for monitoring its progress. Good records also assist your preparer in the preparation of your tax return in an expedient manner and this will save you money. Bad information furnished to your preparer costs you money. More time is spent finding supporting documents and explaining entries to your records. More of your preparer’s time will cost you more money.

The better organized your records are, the better off your company, your peace of mind and your financial situation will be. Take the time now to save time and money in the near future.

One item that needs definitive attention in addition to the list above is an accurate and effective records system for tracking your business transactions. This can range from utilizing software such as Quickbooks for a small business to a much more intricate system for larger concerns.

business-buttons-1422185The benefit of such a system, whether large or small, is that it generates information for use by the owner to run their business and to track their progress. A myriad of reports are available from the software to see how the business is either growing or not. In addition, especially for small businesses, your CPA can assist you with setting up your chart of accounts and can teach you how to record transactions that are pertinent to your business and produce the reports that the software provides.

How many times have we heard from successful business owners that the key to their business is that they have entrusted various functions of the business to qualified people in their organization. One of the key persons on your team is your accountant, whether in-house or outsourced such as a CPA. For smaller business owners, their CPA serves a dual role, assisting with transactional issues and preparing tax returns. For many small business owners, their business is a Schedule C contained in their 1040.

Starting a business is just one step in the process, maintaining and growing it involves much more time, work and effort. Records are kept for a reason; to learn from the past in order to glimpse into the future. When considering a new business venture, a meeting with your CPA would be time well spent to evaluate the options available to you, ensuring that your recordkeeping  system is the right one for your business.


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