For several businesses, preparing income tax returns with the help of an accountant makes sense. Business owners usually do not have the time or skill needed to prepare business taxes – and errors could be costly. Hiring business tax accountants makes sense so that the job is done correctly and there are no anxiety issues.
To do the job well, however, your business tax accountant or preparer would require all correct tax records beforehand – preferably systematized. To avoid penalties, you would like to increase your tax deductions and file your returns before the deadline. Generally, businesses and individuals are expected to file their taxes in the first quarter of a calendar year. The self-employed professionals may be given more time.
The following is how you must prepare tax records so that your accountant has more time to focus on maximizing your tax deductions.
Common Business Records Required
• The business’ financial statements that include profit-loss statements, balance sheets, income statements, and cash flow statements.
• If you have staff on-board, payroll information is mandatory too.
• Business expenses (advertising expenses, travel expenses, utilities, rent, maintenance, office supplies, Internet costs, shipping and raw materials).
• Motor vehicle expense data. This denotes any non-personal use of automobiles, telecommunications, operating expenses, vehicle driving log, etc.
• Asset disposals or additions during the year (land, vehicles, buildings, machinery, etc.).
• Business home-use details – in case your house is your primary business place, or you are earning business income using your home’s work space and use that space frequently to meet with customers, clients or patients.
Saving Money on Accountant Fees
Accountants usually are paid for the hour. Therefore, if you do not prepare necessary documents well in advance and make their job harder, you would have to more for the service. Fees differ depending on your business’ size and how deep your preparer or accountant would have to go to finish your return. Fees could be a couple of hundred dollars or a few thousand dollars or anywhere in between.
The following tips shall help minimize your accounting bill:
• Gather all your information and receipts and keep them handy before meeting your accountant. This shall save time and money.
• Be organized as much as you can. You may, for instance, clip groups of invoices together by their type so that your accountant need not figure out much.
• Summarize and tally things wherever possible. Also, check your results twice. Checks, business expenses, and invoices – all must be totaled and categorized.
• If you have multiple businesses, you would need separate expense and revenue figures for those different businesses, since business income should be listed as per individual business.