How to Organize Your Small Business Bookkeeping for Your CPA

| 2 min read

How to Organize Your Small Business Bookkeeping for Your CPA

Holiday sales are over, inventory is starting soon, and it's tax time. While a small business owner may need a moment to take a breath, there is no rest for the weary because tax preparation deadlines are just around the corner.

When it comes to bookkeeping, it is tempting to push it aside and think about it later. Understanding the best way to organize your bookkeeping before passing it on to a tax preparer provides baby steps to get ready one day at a time.

Getting It Done Early

Rushing to finish isn't ever fun and often results in missed deductions or mistakes in income or expenses. Sometimes this becomes a real problem and you end up with fees and interest from the IRS.

Be aware, because of the IRS's stringent rules and regulations, errors can become extremely costly.

Tips to Organize Before Meeting With Your Tax Preparer

Making sure you are prepared saves time for your tax professional and this equates to cost savings for you.

The less time an accountant has to spend organizing your tax items, the less they will charge for services. Here is a checklist of ways to get organized before meeting with a tax expert:

  • Catch up on your reconciliations. If you are behind on these, finish through the end of December before attempting to have your taxes done. Enter any missing income or expenses and ensure that your bank and credit card statements agree with the general ledger and financial statements.
  • Ensure that payments made through platforms like PayPal, Shopify, or eBay are shown as income. You should receive 1099-K forms for the amounts you received through these vendors. Also, count any invoices that you sent out but haven't yet been paid as income.
  • Take care of the 1099 and W-2 forms before the end of January. If you paid a contractor $600 or more, you are required to issue a 1099-NEC and file it with the IRS. Before filing these forms, obtain a W-9 (ideally get this filled out before a vendor does work for you). All employees must be provided a W-2, so handle this as well. Verify each individual's social security number, first and last name, and address for any forms you are sending out. Employees should fill out a W-4 when they begin working for you but addresses do change, so check all the information.
  • Include any personal funds used for business purchases, calculate business mileage, and interest you paid on loans or credit cards as deductions. If you are using QuickBooks Online (QBO) to do your reconciliations, interest is included in that task.
  • Minimize the amount of physical paperwork you keep to avoid frustration and confusion. QBO allows you to save a digital copy of receipts attached to the expense and this is a much easier and more secure way to keep track of expenses. Gone are the days of giant shoeboxes of receipts because there are some new and improved ways to manage this task.
  • If you have inventory, do an end-of-the-year count. These numbers should match your inventory software numbers.
  • Finally, run financial statements and look at key areas of concern.

A lot of these things can be overwhelming, especially with all the moving parts at tax time. You can always consider outsourcing your bookkeeping if you'd like to just get back your time, reduce your stress, and make tax time a breeze.


An Affordable Bookkeeping Alternative to a CFO

Outsourcing your bookkeeping is more affordable than you would think. We save you money the moment you hire us by cutting out the expensive cost of hiring an in-house CFO.

Working with a remote bookkeeping service will still provide you with all the value you could get from an in-office bookkeeper but at a fraction of the cost.

Learn more

Learn How We Can Impact Your Business Growth

You’ve got your company’s best interest in mind. Guess what? So do we! You can rest assured that we will work closely with you to create actionable business plans and accurate financial reporting. We offer our toolkit of financial intelligence that will be your greatest asset for business growth.

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