The Art of Doing Taxes Without a Bookkeeper
Most people’s least favorite time of the year is coming. No, not Valentine’s Day. Tax Day.
As a business owner, you have the responsibility (and privilege) of filing your taxes with the federal government and at the state level. Tax time has a really bad reputation because it takes time away from business and life.
But we’d like to encourage you to shift your thinking around taxes. Paying taxes means that you’ve earned profit in your business. And while it might be painful to let go of those precious dollars, with Profit First you could be incredibly prepared.
When money is tight, it’s common to want to hold onto it and avoid paying for help in your business. But having help with bookkeeping and taxes is actually one of the best financial decisions you can make (and we’re not just saying that because that’s what we do).
Let’s take a look at what doing your taxes looks like without a bookkeeper:
- Reconcile your books. If you haven’t been doing this monthly, you’ll have a whole year of transactions to take care of.
- Review any unpaid invoices in accounts receivable and get aggressive about collecting them. Having revenue from last year carry into the new year isn’t ideal.
- Ensure you have your employees’ and vendors’ correct addresses and prep both W-2s and 1099s for them, before the end of January.
- Prepare a fixed assets register, calculate depreciation and make book adjustments as needed.
- Perform account analysis on all other balance sheet accounts to make sure all balances are correct and current.
- Match all transactions with their corresponding documents–receipts, bills, packing slips, etc.–to make sure you have the paper trail you need.
- Download bank statements and store in a safe place.
- Download payroll reports and store them in a safe place.
- THEN get to work on your tax documents!
This is a truly abbreviated version of our 31-point checklist for the end of the year. So much more goes into ensuring your books are up-to-date and that you’re following the letter of the (tax) law.
Download the 31-point checklist here!
On the plus side, tax time is a breeze with a bookkeeper on your side. Not only does a good bookkeeper take care of most of the above for you, they’ll also work with your accountant so you’re not the one in the middle. There shouldn’t be any hunting for documents and forms because your bookkeeper makes sure they’re already accounted for.
And even better is that a good bookkeeper will walk you through how to painlessly have the tax funds you need come tax time. So there’s no putting off your IRS bill–because that’s never a good idea.