TOP DRAWER ARTICLE

Get Organized for Tax Season
by
HL Carpenter

Ho! Ho! Ho! Is your business ready for the season that arrives after the holidays? It’s almost here - tax time, that is - and getting organized so you’ll be ready is a good idea.

Here are five tips.

• Tie down your income. You’ll want to verify that tax documents you receive early next year, such as Form 1099, are correct, so add up cash register tapes, bank deposit slips, receipt books, invoices and credit card charge slips.

• Wrap up your inventory. Records of items you bought and resold to customers help maximize your cost-of-goods-sold deduction. Total your cancelled checks, receipts, credit card sales slips and supplier invoices.

• Give yourself the gift of expenses. Overlooking a business expense means missing a tax deduction. In addition to your cancelled checks, include amounts from account statements and petty cash slips.

• Put a bow on business property. Purchases of furniture, computers, machinery or other business property can qualify for depreciation deductions, including bonus depreciation and immediate expensing under Section 179. If you sold an asset during the year, you’ll need accurate information to compute your gain or loss. Gather real estate closing statements, cancelled checks, purchase orders and sales invoices.

• Box up your records. Did you have to scramble to locate all your financial records? Buy an inexpensive software program that will help you keep your business organized throughout the year. If you don’t like to be boxed in, use an online service.

Tax season may never be as enjoyable as the holidays that precede it. But organization is vital to your business. A good recordkeeping system allows you to monitor your firm’s progress, and helps you with tax and other planning decisions that can save money. You might find that those savings make next year’s holiday season even happier.

Originally published December 2008.

Last update: January 8, 2011