I’m a ‘Profit Engineer’ and a bookkeeper, not a tax preparer! BUT…that doesn’t mean I don’t have a role in my clients’ tax preparation each year. Park City Bookkeepers saves thousands of dollars for our clients in and around Salt Lake and Park City. Here at the end of January, it’s time to start getting those files ready for the poor soul who has to do all that tax work.
Just kidding! Some of the bet people I know are CPAs! The thought of doing a 1040—even my own—makes me cringe on another level. But I greatly respect the people that do it every year: they’re hardcore. The 300 hour work weeks, dealing with the clients that are upset with a return because it wasn’t what they were expecting.
As a bookkeeper, part of my job is to serve as a liaison between the tax preparer and the client and to make small business tax preparation as painless as possible for everyone!
If you’re a small business with a bookkeeper, take advantage of your bookkeeper’s translation skills to help you with your small business tax preparation. Here’s how:
1. DON’T FALL BEHIND
One of the biggest advantages of outsourcing your small business bookkeeping is that your records are always up-to-date. Income is properly tracked, accounts are reconciled, and expenses recorded. Making sure your bookkeeper has access to read-only bank statements and check images, ensures they can access pertinent information quickly and efficiently. Timely financials mean you are able to make better business decisions and there’s no big rush at year-end to play catch up.
2. MAKE THE INTRODUCTION TO YOUR BOOKKEEPER AND TAX PREPARER
Do this as soon as possible, so they can coordinate on how to handle certain things. Will they do quarterly reviews together? Will the tax preparer want to make periodic adjustments throughout the year, or just at the end? Who will enter these year end adjusting journal entries? Who’s going to prepare the 1099s? The smoothest (and quickest) tax returns to process for our clients are those where we have a great relationship with their tax preparers.
3. OUTSOURCE YOUR PAYROLL
Payroll tax compliance can be a struggle. Most small businesses outsource their payrolls for good reason; running payroll can be a distraction from growing their business and mistakes can be costly. 40% of small businesses incur an average of $845 per year in IRS penalties related to payroll. Your bookkeeper, whether managing payroll or not, will make sure that your books tie into your returns and your W2s before passing them along.
4. SHARE ACCESS & DOCUMENTATION
Another part of tax preparation for small businesses is record-keeping. The IRS requires that you keep proof of your income and expenses, and us bookkeepers can help with this by setting up all of your back office processes. We have lots of options for this—Dropbox, Box, Google Drive, or my preferred method…HubDoc, which allows for categorizing of documents into your accounting software directly and it has the ability to rad text and save time on data entry.