Business Tax Preparation

Business Tax Prep

For all business owners, there is a need for you to carry out business returns. In this article, experts from RE Donica & Associates share tips about the records you need to have at your disposal for tax preparation. Let’s share what you need to have.

Have Necessary Information

When you choose RE Donica & Associates to help you with your business tax preparation issues, you need to know that carrying out this process for the first time can be a little bit daunting, and that’s why when you hire us, we give you a list of information that you should have. Upon gathering certain documents before the process begins will reduce the frustration chances. Here are some of the documents you should have:
  1. Your accounting documents and records
  2. Business tax return from the previous year
  3. Partnership agreement
  4. Bank statements
  5. Incorporation articles
  6. Vehicle information
  7. Payroll details
  8. Depreciation schedules
  9. Credit card statements
  10. Asset details

Returns from the Previous Year

Even though you don’t want to remind yourself of all the taxes you incurred in the previous year, here at RE Donica & Associates, we advise you that there is a need to dig into your last year’s tax return report. This statement provides us with the necessary information to serve as a better roadmap to the current year’s tax return. For instance, assuming that you are preparing the return for the first time, your prior-year return will provide the following information:
  1. The federal tax identification number
  2. In case there are no changes, we will access shareholder or partner information easily
  3. The method utilized to trace your business finances
  4. Business code number and activity descriptions
  5. The date of election that resulted in an S corporation
It could also help if you knew that your initial year return is an incredible comparison tool once you complete your current year’s tax return. Through this document, red flags can be raised concerning possible evaded deductions or other items that seem relatively small or large compared to the previous year.

Incorporation articles

Assuming that you don’t have the tax return from the previous year or are filing a return for a business incorporated recently at RE Donica & Associates, we recommend that you come with the necessary incorporation documents to help provide critical information. This information includes:
  • The state under which you incorporated your business
  • The list of officials
  • The possible ownership percentages in case it is an S corporation and the list of shareholders

Accounting Documents and Records

At RE Donica & Associates, we make it clear to all our clients that expense and income records are core in the tax return process. However, you might need a balance sheet, but this depends on the assets and gross receipts level.

Assuming that you work with accounting software like Quicken and QuickBooks to store critical financial details, you must come with a printout of the profit and loss statement, not to forget the balance sheet to act as reference material when the tax return process starts. Similarly, you can choose to include the full information in an Excel spreadsheet. Despite the type of software you use, you need to organize your financial records to help make the tax preparation process easy for us.

Partnership Agreement

Since most clients might find it hard to locate the previous year’s tax return, we encourage using a partnership agreement. This document provides us with essential information like:
  1. The date when the partnership began
  2. The number of partners
  3. The method used by the company to track business finances, i.e., accrual or cash
  4. The money invested by each partner into the partnership initially and their current ownership percentages
  5. Data concerning expense items or specific income are not associated with ownership percentages, loss, or profit

Bank Statements

At RE Donica & Associates, we believe that careful storage of crucial documents pays off in the following situations: We believe that your checking account records and bank statements are an excellent way to monitor your expenses and income activities in your financial year. This plays a significant role in situations where you don’t have access to organized accounting records. It is essential to know where to find these records and statements for easy access when we need them during the tax preparation period.

Moreover, when you analyze your deposits and expenditure, you will categorize deductions and income for easy tax preparation. We also advise you to match your end-year balance to the checking account balance from the previous bank statement to ensure every coin is accounted for by recording all cash transactions available in the accounting documents.

Vehicle Information

This applies to all businesses with vehicles used by shareholders or employees for the company or personal use. The following mileage information is critical in tax preparation.
  • Commuting miles
  • Personal miles driven
  • Miles driven for business purposes

Payroll Details

This information includes all your payroll tax filings, the federal and state tax reports. Availability of these documents ensures an accurate payroll tax and expenses well recorded in your accounting documents.

Description Schedules

In situations where you want us to help you prepare your tax returns for the first time, you are required to give details associated with your business’ assets that are depreciating at the start of the current tax year. We utilize different software to calculate the expected rate of depreciation of the stated assets in years to come. What you need is:

  • The initial cost of the asset
  • The date you put it into service
  • The asset description
  • The recovery period of the assets
  • Accumulated depreciation cost up to the current year

Credit Card Statements

Business owners with small businesses have limited time in monitoring the day-to-day expenditures of their business. However, it is essential to know how much has been spent on such during the tax period when calculating the write-offs. To help you sort out these expenses, your credit card statements can play a significant role. You need to keep them within your reach.

Asset Details

As time goes by, assets bought by a business depreciate compared to the current year’s expenses. This is the information needed for these assets:
  1. How often the asset is used for the business
  2. The date you put it to service
  3. The initial cost of the asset
  4. Asset description

We Want To Hear From You!

Our favorite part of the job is meeting our clients. Our passion is delivering stellar tax preparation and planning for individuals and businesses. If you’ve got tax questions, we’d love to hear from you!

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