How To Start A Year Financially Strong

As you charge through the first quarter of a new year towards new goals, take a minute to ensure you start strong with all of your financials in order.  Pause for a minute, because there is still time to make sure your 2015 financials are wrapped up with a nice bow on top.

We realize you may not get the rush of excitement associated with a Christmas present when your financials are in order (We do, but we know better than to expect that from you).  There is a satisfaction and peace of mind that comes with knowing everything is in order.  We guarantee it will make tax organization easier, and your CPA will thank you for how orderly and prepared you are.  We have a few tried and true suggestions here at Check Off Your List that might even bring a smile to your face at how easy they are to incorporate.

Grab a cup of coffee and make sure you did the following steps to guarantee you’re 2015 financials are wrapped up with a nice little bow on top and you are on track for financial success in 2016.  It’s not Christmas all over again, but these are valuable tips that will save you in the long run.

1.  Account for every transaction.  Every. Single. One.
Ensure all your transactions, income and expenses are accounted for in some sort of financial program, such as QuickBooks, Excel, Peachtree, or Quicken so that you can easily provide this information as financial statements to your CPA. This is a great way to ensure that you are providing accurate and up to date information for your CPA to use as they prepare your tax documents.

Have no idea where to begin or what software to use?  Our bookkeeping experts can easily guide you to a solution that works for your business and will organize your accounts to work for your specific needs. Click here for details!

2. Yes.  You do need that receipt!
Verify all documentation for EVERY single transaction is accounted for and filed.  It is much easier to locate any missing documentation now (only 3 or 6 months away from the transaction date) than in a few years when you are being audited and are required to provide that information.  The following methods are great way to ensure that your documentation is in order.

  • A Shoe Box or Rubbermaid box – This is the least recommended, but please do this at a minimum.  In the event you are audited, you will need a piece of paper from the vendor to support any transaction that shows up on the bank statement.  In the same way, any transaction that shows up on your bank statement needs to have a supporting documentation to prove what was purchased as a business expense.
  • A Binder per tax year containing bank/credit card statements for each month of the year.  Have a full page envelope in the binder behind each statement holding the documentation for that statement.  This allows for easy search by year and month in the event of an audit.
    1. You can use this same method by stapling the documentation to the statement and filing the statements in chronological order
    2. This can be done digitally by creating a folder system as follows:  year  >  month  >  credit card account or bank account (all supporting files in this folder)
  • A Binder for vendors containing a tab for each vendor (including bank/credit card accounts) Place each piece of documentation behind a divider tab designated for that vendor.  This allows for easy search by vendor rather than month.  It is important to put the documentation behind each tab in chronological order for easy location.
    1. You can use this same method in a filing cabinet using hanging folders
    2. This can be done digitally by creating a folder system as follows:  year  >  vendor (all supporting files in this folder)

NOTE: Be sure to attach the digital capture of the documentation to the transactions in QuickBooks (or other programs).  Newer versions of QuickBooks have the ability to upload .PDF and .JPEG and save with each transaction (i.e. the check that pays the electric bill can have an image saved with it that is a scanned electric bill the check pays).

3. What do W-9s and $600 have in common?
Ensure that you obtain a W-9 from all contractors to whom you have made payments. In addition, if you paid someone who is not your employee (e.g., subcontractor, attorney, accountant) $600 or more for services provided during 2015, a Form 1099-MISC needs to be completed, and must be provided to the independent contractor by January 31.  Not sure about this step?  Find more info about how we handle these forms here!

It’s not too late!  The 1099-MISC form needs to be filed with the IRS by February 28th.  Check Off Your List is able to prepare the 1099-MISC Tax forms on behalf of your company or in collaboration with your CPA.

4.  Plan ahead.  Make a reservation!
This is the busiest time of year for CPAs.  It is always a good idea to reach out to your CPA early to inquire if there are any new information or changes to the filing requirements of which you should be aware for the coming year.  If you haven’t already, be sure to contact them to schedule your appointment to review your tax documents. This provides the CPA with a time-frame to anticipate the arrival of your financial documents and it also provides you with a deadline to have your financial house in order.  You will avoid the last minute rush to meet the tax deadline or the hassle of filing an extension due to poor planning.