Preparing for Tax Season in Saugus – A Checklist for Businesses

Every time the financial year is about to end, many businesses in Massachusetts go for last-minute tax preparation, which makes it way more hectic for business owners. That is why it is better to start preparation for tax season early to avoid last-minute rush, which could lead to blunders resulting in costly penalties. 

The best way to deal with tax preparation is to get a certified public accountant in Saugus on board who is used to dealing with such situations, too, with utmost precision. A checklist makes sure that all required documents are in order and deadlines are kept in check. We have prepared a guide for businesses to help them effectively prepare for tax season.

Organize financial records

• Gather all financial statements.

Collect all financial records, bank statements, and credit card statements. Make sure all such transactions are recorded accurately.

• Income records

Gather records of all income from various sources earned in the financial year, which includes services, sales, and other activities associated with the business. Records include receipts, invoices, and other such documents.

• Expense documentation

Maintain proper records of all business expenses, which include invoices, receipts, and other proofs of purchase of such goods that are eligible for deductions.

Review and reconcile accounts

• Bank reconciliation

It is essential to make sure that your records are in sync with the bank records to avoid any complications later.

• Accounts receivable and payable

An accounts receivable review is needed to make sure all payments are correctly accounted for. In the same manner, an accounts payable review is required in order to make sure all bills have been paid and precisely reported.

Inventory management

Numerous businesses maintain an inventory. If you do, too, a thorough inventory count is suggested, which helps in precise reporting of the cost of goods that are sold and management of deductions associated with inventory.

Understand tax deductions and credits.

For individuals and numerous types of businesses, there are a plethora of credits and deductions available that significantly reduce the tax burden. It is essential to have a better understanding of all the deductions and credits that are mainly available for your business to take advantage of. The deductions are generally on office expenses, employee wages, and vehicle expenses. The credits include R&D credits, energy efficiency credits, and WOTC (Work Opportunity Tax Credit), which provides significant tax savings.

Consult with a tax professional.

As a business owner, a person is already occupied with numerous works related to business, which makes tax preparation and planning a significantly stressful task that also consumes a lot of time that could have been invested in business activities. That is why a certified public accountant is suggested to save precious time while also making sure that everything is in its optimal condition, which gives peace of mind.