If you haven’t already, now is the time to get your end-of-year (EOY) documents ready for your accountant to complete your business taxes.
Not sure what documents you need? Here’s a checklist to help you out.
Now is a great time to review how 2020 was for your business. Here are some financial documents you can use to determine where you stand financially with your business:
- Income statement
- Balance sheet
- Cash flow statement
The income statement, also called a profit-and-loss statement, is the one your accountant will use to prepare your taxes. It can also be helpful to create a summary listing your assets and expenses for the year.
If you use your personal vehicle for business, your accountant will also need your mileage tracker. You should have been noting dates you drove for business throughout the year, how many miles, and a description of your activities. With this information, your accountant can ensure you get the best deduction for your mileage usage.
Home Office Expenses
If you are using a home office to run your business, you can write off space (as long as it’s used only for business purposes). To get the maximum amount you’re eligible for, total up the following expenses throughout the year:
- Mortgage interest or rent
- Property taxes
The square footage of your entire home and the office space will be needed to get the deduction. The percentage of office space will determine how much of each expense is deductible. The accountant will also need form 1098 from your mortgage company.
Other Expenses Your Accountant Should Know About
Did you travel or dine out for work this year? Make any gift purchases for vendors or clients? These things add up, and you may be able to write a portion of them off for the year.
Gather receipts and place them together with expenses so your accountant can more easily determine what a qualifying deduction is and what isn’t.
Review Vendors and Lenders with Your Accountant
Did you pay vendors for services this year? If you paid any vendors over $600 for work they completed for your business, the IRS requires you to send a 1099-MISC to them.
If you haven’t already, get a completed W9 form from each vendor to complete the 1099-MISC. You must send a copy to the IRS no later than January 31, 2021.
As for lenders, you should provide any loan statements you have for business equipment or supplies to your accountant. If you have a year-end statement totaling the amount you paid, that should be sufficient.
If you have physical products as part of your business, now is a great time to take inventory and reconcile your end-of-year balance sheet. Your accountant needs to know how much you spend on inventory throughout the year, what you still have in stock, and its current value.
Use an Accountant You Can Trust
If you don’t already have an accountant you can trust, call us today at JStevens Accounting. We do more than taxes; we also help with payroll and bookkeeping services, ensuring that your business cash flow is optimized all year long.