When the financial year is about to end, it’s time to get ready to file your taxes. For small business owners and startups, this can be a daunting task, as there are plenty of organization and preparations that need to be done. If you are a new business owner, it’s time to learn tax preparation. If you are employed, it is also crucial that you learn how to prepare your taxes by yourself. You don’t need to be an expert in accounting to prepare your taxes, and it’s better to do it earlier, as your taxes won’t go away if you ignore them. You can also hire an accountant to help you with the task.
Here are a few steps that you can take when the financial year comes to an end:
Gather all your records
The first step you have to take is to gather all your records for the financial year. This includes wage information from your employees, bank statements, deposit slips, receipts, and other records that consist of important information you will need for filing your taxes. By doing this ahead of time, it will save you the hassle later on. Go through your records and make sure that all the information is accurate. It is best to have all your records in one place such as a tax preparation program or a spreadsheet so that you won’t have to dig around in different places if you need something. To make the process even easier, consider opening an online banking account. With an online account, you can easily monitor your business’ financial transactions in real time, and when it is time for end of the year tax preparation, you will have a detailed transaction history for your business.
Social security information
If you had a child or adopted a child under the age of 17 within the past year, your social security information is important, as it can give you tax credit. If you are single and you earn under $75,000 annually, or married and file a joint account with your spouse with an annual income of $110,000, you are eligible to have a tax credit for each child that you support, provided they are under the age of 17.
The IRS and the government support charitable donations and offer deductions for donated goods. Collect all your receipts containing a list of your donations, as this should be included in your tax return. Donations can be in the form of goods or money, but you need bank records as proof. These are necessary when the IRS does an audit of your donations.
Use last year’s tax return
Using last year’s tax return as a resource for preparing this year’s tax return Is important, as you can get a lot of valuable information by studying last year’s records. Some of the information you can look at include traditional incomes, capital gains, and tax loss.
Consult a professional
If you are working on your taxes alone, it might be best to consult a professional, especially if you are not confident. There may be recent changes to the law, or important details that you might not know of, and a professional can help you identify the steps you need to take that will affect your taxes.
Preparing an income tax statement can be easy if you know what you are doing. Remember to keep all your important records, so that when the time for filing comes, you won’t have to stress about losing some important documents. If you have concerns or questions, consult the IRS. If you do this, the end of the financial year won’t be as scary.