Year End Tips to Prepare for Tax Season
Using a checklist to prepare to close your books is a helpful way to track and clean up activities so that you are ready to file taxes and start your new year off on a fast start. Now is the time to start wrapping things up to be able to close fast.
Below you will find some areas that will help you check off tasks that are commonly forgotten or misrepresented.
1. Get your financial books in order.
-Reconcile cash against bank records and correct any discrepancies
-Account for interest earned
-Resolve negative cash balances
-Adjust fair value investments as needed
-Void outstanding checks
-Confirm restricted cash balances
b. Long-Term Assets
-Record capital asset outlays, additions, disposals, and deletions -Include capitalized expenses (such as legal and appraisal fees) -Update useful life calculations for fixed assets -Ensure depreciation schedule is being followed for existing assets -Write-off fully depreciated PP&E (property, plant & equipment)
-Enter accrued payroll values
-Determine compensated vacation time payable
-Complete state-required payroll reports and pay subsequent payroll taxes
-Record material payroll payable
-Report employee benefits such as life insurance, transportation stipends, and educational reimbursements on W-2 forms
-Record goodwill impairment -Report goodwill gains and losses
-Adjust property tax accrual to match assessment for the current year
-File sales tax reports
-Prepare, review, and file applicable state and federal tax returns
-Identify opportunities to take advantage of tax incentives
-Reconcile total expenditures against yearly budget and resolve overspend
-Forecast revenue and expenses for the coming year to prepare a new budget
2. Determine your position.
a) Finances - Examine your financial documents and analyze ratios.
b) Goals - Evaluate your goals from last year.
c) Taxes - Evaluate your current tax strategies.
3. Plan for the coming year.
-Set next year's goals. -Prepare an action plan or plans. -Start implementing your action plans
4. Get your tax documents prepared.