12 Small Business Tax Tips to Steal from the Experts
The following post was written by Mike Sickler, founder of Retail Intel- a web app aimed at retail and restaurant small businesses.
It’s that time of the year again… tax season!
We all know that having clean, accurate, and up-to-date books is crucial for any small business.
Nevertheless, the year-end cleanup process can be incredibly stressful and mind-numbingly dull – not to mention just plain time-consuming. It’s a process I have more experience with than most – I used to handle the bookkeeping for my family’s retail business, and as the founder of Retail Intel, I have reconciled more QuickBooks companies, for more months, than I’d like to remember.
To make things easier for myself, I came up with a sanity-saving checklist. I knew that if I got through the following 12 points, then I wouldn’t be missing anything vital. I hope these tips help you this tax season!
Bank Reconciliation
1. Compare Cash Deposits
Compare your total cash deposits to your POS reported totals. If you haven’t been doing this month-by-month, save time now by comparing monthly totals.
2. Review Credit Card Processing Statements
Get statements from your credit card processor, and make sure your total deposits and fees on their reports match your deposits and fee expenses in QuickBooks. Again, don’t focus on matching every single day exactly, because they often won’t line up. Instead, focus on monthly totals. The key is to make sure you’re capturing your fee expenses accurately.
3. Review Bank Statements
Next, turn to checks. Review your bank statements to see if any handwritten checks were cashed but not entered into QuickBooks.
4. Check QuickBooks
Finally, make sure all direct debits are entered into QuickBooks. Save time by loading your bank statements into Excel, grouping by the memo column (which should have the vendor name in it), and comparing the totals by each vendor to the Transactions by Vendor report in QuickBooks.
SEE ALSO: Here’s How POS Software Saves You Money on Taxes
‘Profit and Loss’ and Balance Sheet
5. Make Sure Billing Is Current
If you paid rent or any other expenses for January 2014, make sure the bill date or check date was in 2014. Make sure any bills dated 2013 are entered into QB with a statement date of 2013, to reflect when the expense occurred.
6. Account for Unpaid Payroll
Make sure you accrue any unpaid payroll expenses for the end of December.
7. Confirm Year-End Closing Inventory
Book a year-end closing inventory amount. If you didn’t do an accurate hand-count of inventory on 12/31, make a best guess at what the dollar value of your closing inventory would have been.
8. Confirm Sales Tax Liability
Make sure your December sales tax liability shows on your 12/31 balance sheet.
9. Get a Commercial Loan Statement
Get a year-end statement from your bank for your commercial loan (if you have one). Make sure you’ve booked the principal/interest splits correctly, and that the principal balance of your loan in QuickBooks matches the closing balance on the bank’s statement.
10. Make Sure Liabilities Are Current
If you have a gift card, loyalty program, or something like Groupon or Living Social, make sure your outstanding liabilities are up to date.
11. Consult With Your Accountant
Check with your accountant for rules regarding fixed asset tracking. Make a list of all the equipment you purchased and leasehold improvements you made and consult with them on the optimal way to depreciate.
12. Account for Unpaid Credit Card Expenses
Book any credit card expenses that occurred in 2013, but were not yet paid for as of 12/31.
I hope this checklist helps you get your accounts in order this tax season. If you have any questions about best practices in small business bookkeeping or you’d like to know about Retail Intel, don’t hesitate to leave a comment on the post, and I’ll be sure to get back to you.
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