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Small Business Tax Preparation Checklist

Posted by Doug Benjamin on Wednesday, February 13, 2019

Our small business tax preparation checklist helps business owners tackle tax season without breaking a sweat.

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Preparing for tax season can be daunting and a bit overwhelming – especially if you’re doing it for the first time. That is why we’ve created a small business tax preparation checklist to help you tackle tax season without breaking a sweat.

  1. Reconcile bank accounts
    Before preparing a tax return, it is important to reconcile your business bank accounts. This helps you or your tax preparer ensure that all expenses and revenues have been recognized.
     
  2. Update your mileage log
    If you use a personal vehicle for business, be sure to update your mileage log prior to meeting with your tax preparer. They will need a copy of your mileage log and what your vehicle mileage was at the beginning and end of the calendar year.
     
  3. Tie loan accounts to actual balances
    At year end, it’s important to review your loan statements to double check that the loan balances on the balance sheet match the balances on your loan statements. If you are working with a tax preparer, they will want to review your loan statement before preparing the tax return.
     
  4. Properly categorize meal and entertainment expenses
    Recent changes in tax law now require businesses to list meal and entertainment expenses in separate accounts. Expenses for meals are still 50% deductible, however entertainment is no longer deductible.
     
  5. Gather receipts from assets purchased or sold
    Did you purchase any equipment, vehicles, furniture or computers for your business in the last year? If you did, be prepared to tell your tax preparer the date of purchase and what was included in the purchase price.

    If you sold any assets during the year, you will need to provide similar information to your tax preparer. They will want to know what the asset was, the date it was sold, how much it sold for, if there were any expenses tied to the sale and the prior depreciation.
     
  6. Review last year’s tax return
    Looking at your business tax return from the previous year helps identify missed deductions or any items that seem alarmingly larger or smaller in comparison to the prior year. This step is especially helpful if you are preparing your own tax return.
     
  7. Review your product inventory
    If your business has an inventory of products that are sold to customers, an important item in your tax preparation checklist is completing a product inventory. The product inventory itemizes which products have reached an age that makes them either unsellable or sellable but at a discounted price. Whether a product is “too old” to sell will be different for every business. Products that fall into either of these categories should be written off as an expense to help reduce your businesses taxable income.?
     
  8. Review accounts receivable
    Similar to reviewing product inventory, business owners will need to review their accounts receivable to determine which accounts are old and need to be categorized as a write-off. An account that is categorized as old will be based on the business’s set timeframe for when a payment must be received. This could be 30, 60 or 90 days. Writing off accounts that are deemed as a bad debt reduces the businesses tax liability for the tax year.

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The Author

Doug Benjamin

Doug Benjamin

Regional Bank President

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