Taxpayers, whether individuals or businesses, need an efficient, effective filing system for their tax-related documents. Tax-related documents includes records that identify sources of income, keep track of expenses, determine the value of property, save time when preparing the tax return or support claims made on your return. These records would include employer W-2s, 1099s, bank and brokerage statements, cancelled checks and credit card receipts.
Don’t wait until the end of the year or just before your return is due to start gathering the required information. Keep your records in order by date and broken down by category. Organizing your receipts and various financial forms as the year goes along will make it easier to get the numbers you need when it’s time to file your tax return. Before completing a major transaction, such as selling a house, buying or selling a business, or selling investments, talk to your CPA to determine the tax impact and what documents are required.
If you have a lot of transactions to summarize or investments to track, then a software program such as Quicken provides a great way to store and organize your personal information. Small office/home office business owners should use Quickbooks for their recordkeeping needs. If organized correctly the Quickbooks data can be transferred into the tax preparation software. This will save time and fees when preparing your tax return.
Business owners — Many business owners operate as an S corporation, LLC or partnership. In these business entities the income flows through to the owners of the business. It’s important to know how this will affect your personal tax situation. If you have not considered your businesses impact on your personal taxes now is the time to review it. Have you taken sufficient salary from your S corporation?
Please contact me with any questions or concerns you may have related to tax or accounting questions. You can call me at 661-253-0270 or e-mail info@chegwin.com .