Preparing for tax time

It’s the 2^nd of January, the first work day of the year for many businesses.  Now that 2012 is over, it’s time to take a final measure of your accomplishments and report them to the IRS.  Here are 10 things you can do to get ready and make tax time easier.

1. Record your vehicle mileage today!  If you take a deduction for business use of your vehicle, you will need a record of your mileage regardless of whether you choose the standard rate or actual expense method.  You will need the beginning and ending mileage for the year as well as a written record of the business miles driven through the year.
2. Review your mileage records to make sure they are complete.  Use your date book to review your appointments and make corrections where necessary.  It may seem like a small thing, but $.55 per mile can really add up if you’re a “Road Warrior” by trade.
3. If you sell product, get a physical count of your inventory as of the last day of 2012.  The sooner you get this done the better.   It can be difficult to try to figure out what you had a few days ago after you’ve added to your inventory or made sales.  Remember to also make a record of inventory pulled during the year for personal use.  Inventory pulled for personal use is generally not tax deductible so you’ll need to make adjustments accordingly.
4. Take some time to organize your receipts, invoices, and other documents used in your business to record your income and expenses.
5. Reconcile your bank accounts.  If you’ve properly utilized your business bank account during the year it will give you one of the most complete records of your business activity.  Keep your bank statements, business credit card statements, cancelled checks, deposit slips and receipts in a safe place.  You’ll need them later.
6. Calculate your income and expenses for 2012.  This should be fairly easy if you’ve kept up with your bookkeeping.  If not, schedule a day to pull this information together using your bank statements, invoices, receipts and other income and expense related documents.  Your tax preparer can do this for you, but it will cost you.
7. Create a place to gather all of the 1099’s, 1098’s, W-2’s and other tax forms you’ll be receiving during the month of January and early February.  Make sure you have all of them prior to filing your tax return. 
8. Review your payroll records for accuracy.  Make sure you pay your payroll taxes on time to avoid problems later.
9. Issue W-9’s to everyone you’ve paid $600 or more for services rendered to you during the year.  Get those W-9’s back as soon as possible so 1099’s can be issued to them prior to February 1^st.
10. Contact your tax preparer to set-up your tax appointment and keep the appointment.  Sometimes having a deadline other than April 15^th will help keep you motivated.  Remember, your tax preparer needs enough time to prepare your return so giving him or her records on April 14^th and expecting a timely filing simply won’t do.

Here at Storehouse, we specialize in small business accounting.  Give us a call if you need help.