Running a business can be stressful—but filing your tax return doesn’t have to be. Taking steps to prepare early will make the process run more smoothly and avoid any surprises when it’s time to file.
Keep thorough records—all year
Whether you’re keeping your books yourself or outsourcing that task, you should be keeping accurate records all year—not just during crunch time. By keeping track of your income and expenses, you’ll not only enter into tax season prepared for what’s to come, but also keep your finger on the pulse of your business so that you can prepare for when money is tight and optimize when it’s plentiful.
Throughout the year, make sure your business has thorough records of:
- Income, including invoices, and receipts
- Expense receipts for supplies, utilities, rent, and any other operational costs
- Payroll records, including payroll tax filings
- Tax documents, including quarterly taxes, your previous year’s return, and any prior year’s notices that may be relevant
- Bank and credit card reconciliations and related work papers
- Contracts, leases, and agreements
- Travel, transportation, entertainment, and gifts
- Any assets owned by the business
Gather all relevant forms and receipts
In order to file your 2024 business tax return, you’ll need to provide substantial financial documentation to your accountant. Keep in mind that although they may request summaries of the following, businesses should keep proof of their expenses—especially if they’re claiming deductions or trying to qualify for a certain credit.
- End-of-year accounting journals and ledgers
- Balance sheet, cash flow, and income statement
- Transactional supporting documents
- Mileage logs, if applicable
- A summary of business-related expenses, such as (but not limited to):
- Supplies
- Operational costs
- Marketing
- Advertising
- Insurance
- Legal services
- Travel
- Entertainment
- Equipment or assets
- Education and licenses
- Employee and non-employee tax forms
Additionally, make sure your personal expenses are separated from your business expenses. If you encounter a gray area, ask your accountant about how to proceed.
Use electronic methods whenever possible
For businesses who already have electronic records of all their financial documents, filing and paying your taxes online makes sense. By filing electronically, you typically will have your return processed faster while reducing the risk of lost checks or identity theft.
As a reminder, M&S can set up refunds to be directly deposited to your bank account. Be sure to provide your accountant with current bank account information so it is sent to the correct account.