Organizing Your Small Business Records For Tax Season
Soon everyone will be running around making plans for Thanksgiving, buying Christmas presents, attending school functions, taking time off and ringing in the New Year. With all that going on small business owners tend to put aside getting ready for the new year and tax season. There’s always time after the holidays.
Do you want to get ahead of the curve this year and stay ahead? Start getting ready for tax season now by following the steps below.
Office Supplies
Start gathering receipts for all office supplies and expenses. These can range from basic office supplies to postage to services purchased such as hosting, marketing and copy services. Direct sales consultants can also include product, display stands, tables, totes and other party supplies in their expenses. If you don’t already have a credit card that you use for business expenses then get one as soon as possible to help track expenses.
Keep track of any software, office equipment or furniture that is purchased throughout the year.
If you use an accounting system, like QuickBooks, and have not entered your supplies and expenses for the year start now. Complete one month every week and you can have nine months entered by December 31st.
Home Office
If you have a dedicated space that you use for your home office then gather together your mortgage interest, property taxes, home owner’s insurance, electricity, gas, water and trash. You will need to determine what percentage your home office is based on the total square footage of your home.
Did you do any repairs or upgrades to your office? Then add those to your expenses. If you did any repairs to your home that benefited your entire home you can claim a percentage of those.
Vehicle
Whether you claim mileage or actual expenses be sure to keep a detailed record of your business mileage.
If you claim mileage look at all of your expenses and see which ones required you to drive. Come up with a list of places that you drove to and their address, usually on the receipt. Then go to Yahoo Maps, put in your office address and the address you drove to and bingo you have round trip miles for your taxes. To save yourself time create a spreadsheet showing these companies and the round-trip mileage for future use.
If you claim actual expense then gather all of your maintenance and gas receipts. Determine the percentage of business miles you drove based off your total mileage.
Phone, Internet and Cell
Next gather your business phone, internet and cell phone bills. If you have a separate phone line for your business you can write off the full amount. If you do not have a separate phone line, be sure to look over your long distance charges and see if any are business related. Also, get together all of your cell phone bills and determine how much you can deduct.
Contractors
Did you hire any contractors to help you out in your business? If so, take a look at how much you paid each contractor and if it’s over $600 be sure to send them a 1099 for their taxes. If you have a tax accountant they can do this for you. Don’t forget that you can claim money paid to older children for helping out.
Continuing Education and Subscriptions
Be sure to keep track of all classes you take, books you buy, memberships and monthly subscriptions. If your classes were live events make sure you have receipts for parking, transit, tolls, and any materials purchased at the event and meals.
Did you hire a business coach or participate in a mastermind group? If you are not sure how much you spent contact your business coach and they can send a list of services provided.
Travel, Entertainment and Gifts
Did you take a client or potential client out for a meal or drinks? Were you at a restaurant and met someone interested in your business? Keep track of those meal receipts.
If you traveled out-of-town, then you need travel receipts such as airplane fare, taxis, rental car and hotel.
What about birthday gifts, Christmas gifts, cards, closing gifts (for real estate agents) and referral fees? Make sure to gather receipts or check stubs for all of these.
Contributions and Sponsorships
As a direct sales consultant you may hold a fundraiser for a charity, sports organization, or church group and donate a portion of your commission to the group. Or sponsor a sports team in your business name and you can add it to your expenses.
Although the new year is not here yet, start gathering together what you have and you will already be ahead of the game. As the last few months of the year pass by be sure to have a central location for all of your new receipts. Just think, come January 1st you will only have three months of expenses left to organize if you start now.
Stay ahead of the game next year by purchasing accounting software such as Intuit QuickBooks or Peachtree Accounting. Enter expenses on a regular basis such as weekly or monthly. Better yet, find a virtual assistant who can handle your accounting for you. That way you can spend time growing your business. Good luck!
