How to Keep Your Business Tax Prep on Track and Ready for an End of Year Audit
Tax preparation is a complex process, and it can be time-consuming. From the time you start gathering your financial documents to the time you submit your tax return, it can take up to a month for everything to be completed. This is where a tax preparation checklist for small business and business consulting services comes in. Our team of experts will help you with your tax filing process so that you don’t have to do it yourself. We know how complicated the process can be, and we are here to make it easy for you.
Tax Preparation Checklist For Small Business
If you own a small business or are self-employed, preparing your own taxes can be a tedious and time-consuming chore. We recommend doing things one at a time if you’re feeling overwhelmed by the impending filing deadline yet still have a lot of work to do. How should we get going? Get your documents in order first.
We made this tax preparation checklist for small business to make sure you remember everything while doing your taxes, including the necessary paperwork and potential deductions.
Business Documents
- Deposit slips
- Business credit card statements
- Bank statements
- Sales invoices
- Income records
- Fee statements
- Receipts
- Contracts
- Bank deposit slips
- Detailed year-end inventory listing
- Receipts on capital purchases or sales in 2022
- Loan Agreements and year-end balances statements
Meanwhile, here is a tax preparation checklist for small business if you have employees and subcontractors:
- T4SUM: Summary of Remuneration Paid
- Payouts or benefits for workers’ compensation
- Wages, withholdings at source, and taxable employee benefits.
- If you spend money on subcontractors (construction only)
- T5018: Statement of Contract Payments
Correspondence, Tax Slips, And Receipts
- 2021 Tax Return(s): T1. T2125
- 2021 Notice(s) of Assessment
- Yearly correspondence with the Internal Revenue Service
- Income tax, GST/HST/PST, and payroll installment payments
- T4A: Pensions, annuities, and other sources of income (including COVID individual support benefits)
- T4: Statement of remuneration paid
- If you’re in a partnership, also include the T5013: Partnership information return
Investment Documentation
- RRSP contribution slips
- T5008 Statement of Security Transactions
- T5 slips
- T3 slips
- Stock purchases and sales invoices
- TFSA Transactions
Personal Receipts (T1 Only)
- Receipts for qualifying medical expenditures
- Tuition and educational costs
- Donation receipts for charity contributions
- Expenses associated with relocation
- Student loan interest paid
- Childcare costs
Business Deductions
- Advertising
- Taxes, permits, and memberships for businesses
- Donations to charities
- Debt collection
- Bank fees and interest
- Food and entertainment
- Premiums for commercial insurance
- Costs of delivery, freight, and rapid delivery
- Depreciation costs (Capital Cost Allowance)
- Fees for legal and accounting services
- Vehicle expenditures
- Registration and license fees
- Insurance
- Fuel and oil expenses
- Leasing expenses
- Parking fees (business only)
- Interest on borrowed funds used to acquire a vehicle.
- Regular upkeep and repairs
- Communications and utilities
- Travel costs
- Utilities
- Expenses, stationery, and supplies for the office
- Transaction Processing Fees
- Property rental expenses and taxes
- Improvements and maintenance
- Wages, salaries, and benefits that you, as the employer, must pay
- Employees’ gross salary amount
- CPP and EI contributions were paid by the employer.
- Premiums for sickness or disability insurance were paid by the employer.
Business Tax Preparations Tips
For many people, tax season is the most stressful time of the year. The process of preparing taxes can be confusing and tedious. Aside from our tax preparation checklist for small business, here are some tips to help make this process easier.
- Include all income reported to the IRS
The IRS receives a copy of the 1099-MISC documents you receive so that they can compare the income you reported to what they know you actually earned. Ensure that the amount of income you submit to the IRS corresponds to the amount reported on the 1099s you received. - Correctly categorize your company
You need to designate your firm correctly to avoid overpaying taxes. Your taxes will be affected differently depending on whether you classify your business as a C Corporation, Limited Liability Partnership, S Corporation, Limited Liability Company, Sole Proprietor or Single Member LLC.
- Recognize the distinction between gross and net income
Regardless of how many units you sell, you will lose money if your product costs more to produce than you charge for it. Small business owners frequently need to pay more attention to the distinction between net and gross income. - Keep personal and business costs separate
Regardless of whether you properly reported business spending, the IRS may begin investigating your personal accounts if it audits your company and discovers personal expenses mixed in with business expenses. Have a separate credit card and bank account for your firm, and use those for just business purposes. - Hire the right tax accounting services
Your accountant should work with you throughout the year to keep tabs on your cash flow, keep an eye on your gross and net earnings, and keep track of your income and expenses. It’s important to start working with an accountant as soon as possible after launching your firm, not just in March and April when taxes are due.
Outsmart Your Tax Problems With Quadrant Advisory
Quadrant Advisory is a professional accounting and business strategy firm that specializes in helping small businesses, startups, and entrepreneurs navigate the complex tax system.
Planning and strategizing for taxes is a topic that demands a great deal of study and thought. Managed accounting services in Washington, DC, however, may make this procedure considerably less daunting. They are not the same and are commonly mistaken for one another. Preparing for your tax return is called “tax planning,” and it’s done so that you owe as little as possible in taxes. You can use a tax plan to minimize the amount of income tax you owe by taking action after you’ve already filed your taxes.
Do you need help with a tax preparation checklist for small businesses? Let Quadrant Advisory provide you with the support you need! We are experts in tax planning and strategy, as well as accounting management services. You can also count on us for basic financial reporting, compliance solutions, budgeting, and forecasting. Get your free consultation today