The tax complexity of a business tends to grow alongside it, and while taxes may feel manageable in the early stages of growth, the more the business expands, the more complicated the taxes become and the bigger the risk of error.
By working with a tax accountant in Miami, you can file an accurate return that will reduce your tax liability by as much as possible.
Once you’ve established what type of business tax you need to file, there are certain documents you’ll need to maintain throughout the year, and supply them with in advance of tax season:
ID Information
You’ll need to give your accountant a formal record of your legal name and address, Social Security number and ID information for any dependents.
Then, you’ll need to give them formal documentation pertaining to your businesses entity type, its name and address, and your Employer Identification Number, or EIN.
Previous Year’s Tax Returns
Helping your accountant understand your business better (especially if you’re working with them for the first time), you should provide them with the previous year’s tax returns and any supporting documents. If possible, you can also let them look at returns for prior years, too.
Business Income and Receipts
To calculate your taxable income, your accountant will need to look at your business receipts, including the following documents:
- Invoices and customer billings for the year
- Monthly or annual revenue reports
- IRS 1099 forms
- IRS 1099 form-MISC
- IRS 1099- NEC
- IRS Form 1099-K
If you have more than one income stream, you should furnish your accountant with tax forms from each extra source, such as:
- Schedule K-1
- IRS 1099-B
- IRS Form 1099-DIV
- IRS Form 1099-INT
- IRS Form 1099-R
- IRS Form 109-S
Your accountant will let you know exactly what they need to see for each income stream.
Expense Records
Reducing both your taxable income and your tax liability overall, getting the most tax deductions you’re entitled to, requires you providing your accountant with detailed business expenses records, including employee wage reports, contractor payments, health insurance premium payments and business-related vehicle expenses, among others.
For sole proprietors, providing your accountant with information related to charitable donations, IRA contributions, property taxes, home mortgage interest payments, and medical and dental expenses, can help them lower your tax bill.
Financial Records
For enhanced accuracy when reporting your income and expenses on your tax return, you should give your accountant access to your credit card and bank statements, business loan documents, and reconciled investment account statements.
Proof of Tax Payments
For all federal tax payments made during the year, you’ll need to show records of them to your accountant. Additionally, you’ll need to provide them with a payment list for the following if applicable:
- Payroll taxes
- Sales taxes
- Property taxes
- State and local taxes
- Self-employment taxes
Financial Statements
A financial statement is basically a summary of your business results, assets and liabilities at the end of the year. Your bookkeeper should be able to give your accountant a copy of your year-end financial statements, which should include:
- Year-end balance sheet
- Full-year income statement
- Statement of cashflows
When should you start gathering these documents?
Even if you’re not going down the easier route of working with an accounting firm in Miami, you should try to gather all of these documents together as soon as you receive them. By developing and maintaining consistent recordkeeping and record gathering habits, you can reduce filing delays and minimize errors from your tax return.
Unless you have some experience in accounting, tackling your own small business taxes every year can prove to be a real drain on your time and resources, not to mention give you extra stress that you could likely do without. Working with accounting, tax and bookkeeping services is the most convenient and effective way to reduce your tax liability, and your stress levels.
