• What You Need to Know Before Your First Business Tax Appointment

If you’ve never been to a business tax appointment, you may be a mix of nervous and totally in the dark—What do I bring? What can I expect? How do I prepare? Though it can be scary and overwhelming, with a little preparation you’ll be right where you need to be to get the most out of your tax appointment. In the upcoming year, you may be seeing your CPA every few months to make sure everything is on track, so you’ll feel even better the second time around. Get ready for your first business tax appointment with these tips.

What You Need to Know Before Your First Business Tax Appointment

Gather All Your Business Paperwork and Records

When running a business, one of the most important things to do is keep detailed records, including all receipts for business-related expenses, as well as mileage records for any travel you do for the business, contract or employee wages paid, and documentation for any employees or partnerships. See a full list of the necessary paperwork to collect and bring to your appointment from Fundera:

  • Last year’s business tax return
  • Payroll documents
  • Bank and credit card statements
  • Accounting documents (including profit loss statement)
  • Partnership agreements
  • Depreciation schedules

In the future, your accountant will have things like your past tax returns, so there will be no need to bring that. Keep reading to get more details on a few of these important documents.

Start Thinking About Cash versus Accrual

If you have not yet determined how you will manage the accounting on your business, in regards to a cash basis or an accrual basis, this is something that your accountant will go over with you and make a decision on. There are a variety of factors to consider when making this decision, including the difference between the two, which comes down to considering expenses and income when they come in or are paid out, or when they’re incurred. Each system has its advantages and disadvantages depending on your particular business set up and what’s happening in your business at that time. Your CPA will know the best method for you, depending on your business type, industry and financial status. This is also a good time to discuss your preference, if you have one.

Gather Loan Documents and Total Interest Payments Made

You can deduct business loan interest if you’ve paid any interest over the course of the year. This is now limited to 30 percent of the business’ earnings before interest, taxes, depreciation and amortization, according to the Business Tax Filing Guide of 2019, but still provide you with a valuable deduction. Keep a record of all loan interest paid and bring this with you to your appointment.

Categorize All Your Deductions

You need to keep a detailed list of all deductions, or business expenses, throughout the year. “Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business operates to make a profit,” explains the IRS. These are also called write-offs and they lower your total taxable income for the year, which makes them valuable to your business. Your CPA will input this information into their system, so having a record of every expense and the total for each category will make the appointment easier on both of you. The best way to track your deductions is to categorize them in the accounting software of your choice. Categories for deductions include, but are not limited to:

  • Home office
  • Computer internet
  • Professional fees
  • Travel
  • Advertising
  • Business insurance
  • Meals
  • Office expenses/supplies

Prepare Payroll Details for Contractors and Full-Time Employees

If you have employees, you’ll need all payroll records and totals. This should include all tax forms they’ve filled out as a condition of employment, typically this is a W-2 for full-time employees or 1099 for contract employees. If you haven’t had your employees fill out these forms, now is the time to do that. While your CPA may not need to see the exact records, you’ll need all totals ready for them to include in the return itself. Like expense receipts, these are important to keep in case you’re audited. Note that if you also offer health insurance, 401Ks, or any other benefit, you’ll need all documentation related to those benefits.

Get Ready for Taxes

While it can be overwhelming to prep for your first tax appointment, a little preparation goes a long way. While you’re there, you’ll learn about how you can better prepare for next year and what you need to do to ensure your business is running as efficiently, financially, as possible.

Jessica Thiefels
Jessica Thiefels
Jessica Thiefels is a social media coach and organic marketing consultant. She’s been writing for 10 years and you can find her work on more than 500 websites worldwide, including Virgin, Forbes, MarTech, Score.org and more. Follow her on Twitter @JThiefels and connect on LinkedIn.

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