Documents Your Accountant Needs to Do Your Small-Business Taxes
As a small business owner, tax time can be stressful, especially if you’re scurrying to pull together all of your receipts and trying to remember everything you did last year.
Although accountants can help you sort and summarize, it’s a lot less expensive if you do that part yourself. Here are the top three things that your accountant really needs to do your taxes.
1. Financial Statements
Financial statements are a basic set of financial documents comprised of a balance sheet, an income statement and a cash flow statement. For tax purposes, the income statement is the one most used by your accountant, but he or she will also want to see the company’s assets and liabilities.
2. List of Capital Asset Activity
If you bought, sold or disposed of any capital assets in the company during the year, you must account for it in your tax return. Your accounting software will allow you to print out a list of all of your capital-asset activity for the year, and this will give your accountant enough detail to classify any changes. If your listing does not specify the exact nature of the assets being bought and sold, make notes in the margin.
3. Summary of Home-Office Expenses
If your home office is your sole place of business, or if you regularly meet clients or customers there, you can generally claim home-office expenses.
These expenses include a percentage of your utilities, repairs and maintenance, home insurance, and mortgage interest or rent. You can calculate your home-office deduction by dividing the square footage of your office space by the livable square footage of your house, or by dividing the number of rooms your home office occupies by the total number of rooms in the house. Using either formula, multiply your total home expenses by the home-office percentage. Some accountants will ask for all of your original receipts, while others will only want the summary; be sure to ask what your accountant expects you to provide and prep those documents.
Like the vehicle deductions, you can also use a simplified method to claim you home-office deduction. The simplified method allows you to deduct $5 per square foot of the portion of your home used for business.
Everyone knows that tax time can bring about a lot of stress and frustration, but by being prepared and working with your accountant, you can expedite the process and avoid a few headaches.