There’s a great article on YourStory titled, Four accounting mistakes small business owners need to avoid. These are the top four.
1. Not separating personal and business finances
2. Not keeping receipts
3. Not recording payments
4. Not chasing payments
1. Make an Extra Mortgage Payment
One of the most valuable tax breaks that homeowners can claim is the mortgage interest deduction. Deductions reduce your taxable income, which can come in handy if you’re trying to work your way down to a lower tax bracket.
The end of the year is upon us, and it is time to get organized with your accounting records. If you have not done so already, I would highly recommend getting on a robust accounting system for your business. Check out Quickbooks, Xero or whatever works best for you.
To ensure that you are ready for the end the year, I have compiled a list of tips.This not an exhaustive list but a good guide. Some of the tips I got from the National Association of Certified Public Bookkeepers (NACPB).
Enter final transactions for the year
Pay bills, people and other expenses that were incurred in 2016.
Enter ALL cash receipts for business expenses (taxis, business meals, etc)
Review petty cash especially if there is more than one person accessing petty cash.
Reconcile all your accounts and enter any missing transactions.
Work on reducing account receivables by following up with clients/customers to get paid.
Write-off bad debt if necessary, but work on getting paid by customers/clients first.
Make IRA or 401K contributions and donations to charity to reduce taxable income
Make all asset depreciation entries (only applicable for equipment that you had put on a depreciation schedule)
Organize: Make Life Easier on Your CPA and Understand What Happened During The Year
Collect all bank statements and business credit card statements for the year.
Make sure you have check register.
If you have freelancers, get their current address, SSN so you can file 1099s by January 31st.
Inquire from your CPA as to what reports, form and any other documentation are needed.
Ask if year-end reports should be on a cash basis or accrual basis
Back up the accounting file in case of any data loss (cloud or hard drive)
Send a copy of your Income Statement and Balance Sheet to your accountant at the end year to get an idea what your taxes will be for income tax deadline.