by Blair Butters | Dec 27, 2022 | General Tax and Accounting Information, Tax Planning
It’s beginning to look a lot like … end-of-year project wrap-ups, holiday gatherings and celebrations, and time off to rest and reset for the new year. Before you log off, there are a few things to do as a small business owner to button up 2022 and prepare for your tax filing. Crossing these items off your list will bring peace of mind and give you more time to focus on those 2023 goals as soon as the ball drops. Here are four things you can do before the end of the year to make tax time less stressful: 1. Update your payroll records or hire out This is the time to verify all employee wages, benefits, and deductions. Be sure to double-check employment tax rates that tend to change annually. You or your payroll specialist should also make sure all paychecks, year-end bonuses, and payments have been recorded. 2. Gather or prepare financial documents for your accountant Year-End Balance Sheet: This statement includes assets, liabilities, and owner’s equity of your business. The Balance Sheet can help you determine if you may want to look at working on collecting receivables or paying down debt in the coming months. Year-End Income Statement: Here, you’ll see the comparison between earnings and spending throughout the year and will determine a company’s net income for the year. The sheet should have a clear list of revenue in one section and a list of expenses and losses in the other. Subtracting the expenses and losses from the revenue will show the net income. The Income Statement results can help you determine where to cut...
by Blair Butters | Dec 14, 2021 | General Tax and Accounting Information
As the year comes to an end, we can look forward to schedules filled with holiday parties, time off to spend with loved ones, and finding ways to circle back on projects in the new year. One project that will be especially important for small business owners is preparing for tax season. Some of the tasks take time but developing good habits regarding your taxes can potentially save you some cash. Many tax planning moves that can help lower your taxes owed may need to be made before the end of the current year. With this in mind, we’ve outlined a few end of year tax tips that you can do to prepare for the tax year ahead. Review deductions, including the home-office deduction. The COVID pandemic caused many to embrace the work-from-home life, and for sole proprietors, single-member LLC business owners, and gig workers, the home office deduction could mean saving hundreds of dollars (or more). If you’re unsure, check with a tax professional to see if you qualify and what information is needed to claim the deduction. Catch up on the previous quarter’s financials and prepare bookkeeping ahead of tax time. You may be able to better plan for the final quarter by taking a look at the first 3 quarters of the year or last year’s fourth quarter. Taking the extra time to update your books before signing off for the holidays will also make the preparations feel easier in the new year and help determine if you need to adjust your fourth quarter 2021 estimated tax payment. For cash basis taxpayers, be proactive with your...
by Blair Butters | Apr 28, 2021 | General Tax and Accounting Information, IRS, Tax Planning
As we all know, the ancient Greek quote “change is the only constant” most certainly applies to your taxes, and this year has seen more changes to tax guidelines and requirements than in many other years. So, in today’s blog, we wanted to shine a light on some of the most common ones. Change in Charitable Donation Deductions for Non-Itemizers In 2020, the IRS allowed taxpayers who did not itemize deductions to deduct as much as $300 in cash contributions made to charity, for both filing single and jointly. In previous years, this deduction was only an option if you chose to itemize your deductions. However, the passing of The Coronavirus Aid, Relief, and Economic Security Act (The CARES Act) allowed non-itemizers a charitable deduction. These changes are set to apply through 2021 as well with the same $300 deduction for individuals and an increase to $600 if you file as a married couple. These particular changes were made in order to encourage taxpayers to donate to charitable causes throughout the pandemic. Higher Standard Deductions Standard deduction amounts for each filing status have also increased. In order to account for inflation, these numbers typically rise by $200-$300 each year regardless of circumstance. An increase in standard deduction amounts ultimately reduces the amount of income you are required to pay taxes on. Here are the tax brackets and the new deduction amounts for 2021. Married filing jointly: $25,100 – up $300 from 2020 Married individuals filing separately: $12,550 – up $150 Head of household: $18,800 – up $150 Single: $12,550 – up $150 Required Minimum Distributions...
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