Tax season is looming and owners of new businesses may wonder what documents an accountant needs at tax time. If you’ve never worked with an accountant at tax time, the list may seem daunting, but once you’ve supplied documents this year, you’ll find next year a snap.
Before we get to that list, if you run a small business and don’t have your books set up in accounting software, this is where we try to convince you of the benefits of doing so.
Benefits of Accounting Software & Accounting Outsourcing Services
The benefits of being set up on accounting software are many. If you are recording financial transactions manually (or using the shoe box method of accounting), at tax time, while you’re scrambling to find paid invoices, expense receipts, and other records, our California business clients who use our accounting outsourcing service are relaxing while we do all the work. When we work with clients monthly, books are up to date and all transactions are accurately recorded in a timely manner, including invoices, expenses, asset purchases, payroll and more. This means that at tax time, we can run the necessary reports, because the data is there in the accounting system. For the most part, our clients don’t have to do much, because we’ve been doing the heavy lifting monthly (or more frequently) all year. We can export PDF reports, print them, make our calculations and file taxes. It’s a little more complex than that, but you get the idea. This is a great time of year to consider ditching the shoe boxes and spreadsheets and migrating to accounting software. If you don’t, you have a lot of work ahead of you, not to mention a lack of expertise that can and does cause problems (compliance and accuracy to name but two).
Documents Your Accountant Needs
Although the documents an accountant needs at tax time may vary depending on the type of business you run and whether or not you operate a home-based business, the following documents are usually required by an accountant.
- Financial Statements.
Balance sheet, income statement and cash flow statement, tax reports, assets, liabilities.
- Asset purchases or sales.
- Office equipment purchases or sales.
- Office supplies purchases.
- Home office expenses (if you run your business from a home office).
As stipulated by the IRS, to be eligible for home office deductions “you must use a part of your home regularly and exclusively for business purposes”. The part of your home used for business must be your principle place of business, where you regularly meet clients or customers during the normal course of business, or, a separate structure not attached to your home (i.e. a garage or studio). See “Must Know Tips About the Home Office Deduction” at the IRS website for more detailed information. We’ll need to know the square footage of your home office and of your home so we can make a calculation to determine how much of rent, mortgage interest, utilities, maintenance, and home insurance can be deducted.
- Vehicle business-use mileage logs.
Get Ready for Tax Season. Elite AS Can Make It Easy
Whether you need one-time business tax services or would like to discuss how we can make your life easier all year long with our bookkeeping services, contact us.
Elite AS serves businesses in Sacramento County, San Francisco and Bay Area and throughout California.