Is your business ready for the end of 2021? Most of us are still mentally processing 2020, so it’s hard to believe we are speeding towards the end of the tax year already. With the financial challenges, businesses have faced – along with new health regulations and complex rules to navigate due to COVID-19 – this is the perfect time to get a head start on your year-end tax game and make sure your finances are in tip-top shape for the new year. According to Kiplinger, taxes can be one of the most significant business expenses—and the last thing you want for your business is to be hit with an unexpected tax bill.

To get you started, we compiled a handy checklist to get moving on your year-end tax return (including knowing when to ask for help), so you can avoid a last-minute number crunch, end the year well, and do what you do best: run your business.

Know Where Your Business Finances Stand—or at Least Have a Good Idea

Did your business downsize this year, or grow considerably? Did you get payroll tax breaks from having to pay employees who were out sick with COVID-19? Did you get a Paycheck Protection Program (PPP) loan or an Economic Injury Disaster Loan (EIDL) through the Small Business Administration (SBA) under the CARES Act? Do you know your state sales tax requirements? There are so many variables to take into consideration when determining your potential tax obligations—and many of the details regarding loan forgiveness can be confusing at best and incredibly easy to overlook—so having this information readily available will help your bookkeeper know what to deduct (or not to deduct).

Other basics to have on hand:

• Year-end reports such as cash-flow, profit and loss, and balance sheet
• Revenue goals that you made for the tax year
• If your business is the retail industry, a physical inventory to identify what products did well, and which should be replaced to increase sales
• A list of questions or concerns (and maybe a nice virtual cup of coffee) for your bookkeeper

While we’re talking about bookkeeping, it’s never been more important to have the right financial experts behind your business. How’d the year go for your accounting services? Did your company shift from in-house to online bookkeeping, or are you considering the switch? Before diving into the deep end of your financial statements, this is a great time to ask: should I use outsourced bookkeeping services? As subject matter experts, they will be able to catch any new deductions, fix simple errors that could flag you for an audit, and have a keen (and unbiased) eye on how to protect your bottom line.

Get Organized. Really, Really Organized

Gather your detailed ledger, cash flow records, receipts, and other business expenses for your bookkeeper to categorize on a granular level. This will help the year-end process tremendously, especially if the IRS selects you for the dreaded audit. Having your records properly categorized (such as mileage, postage receipts, office supply, technology costs, etc.) is key, but so is making sure the information is meticulously accurate. Doing this monthly is ideal—then by the end of the tax year, you are not left with a shoebox full of miscellaneous receipts to make sense of. Often you will find that hiring an outsourced bookkeeping service or virtual controller on a monthly or quarterly basis will save your business money in the long run and keep your books on track year-round.

Your bookkeeper should also be able to give you an overall snapshot of your business’s financial health going forward—and they can make recommendations regarding large purchases, prevent deduction errors, and help catch any cash flow problems early so that you can fix them before final tax deadlines roll around.

Evaluate Your Staffing Needs and Pain Points

Did you have an abundance of staff this year, or perhaps not enough? As you plan for the new year, this is a fantastic time to determine your staffing needs in relation to revenue. If you discover an imbalance, you may want to consider hiring temporary or seasonal employees to help with the most hectic times of the year. And if you need to cut back on staffing costs, consider replacing your in-house accounting team or controllers with outsourced accounting services. They are a low-cost, highly-skilled alternative to paying large in-house accounting team salaries and benefits—not to mention paying utilities and rent on a big office space. Online bookkeepers offer consistency and the ability to work from anywhere, anytime you need them.

Update Your Files and Employee Records

Updates aren’t just for operating systems and phones. Doing a self-audit of your business and financial records now will help ensure that they are not only accurate but secure. You want to make sure that you have updated tax information for your current employees, along with their contact info and any job title or payroll updates. Did you use any new vendors this year? They should be included in your updates. It’s also a good time to purge any outdated employee files and ensure they do not still have access to sensitive company files.

While you’re getting ahead, why not back up your digital records to a cloud or a separate/external hard drive? Backups save any future stress in case of a system crash.

Consider Saving Time, Money, and Sanity with an Outsourced Bookkeeping Service

As a business owner, free time may be hard to come by these days—and knowing when to ask for help could be the difference between a smooth-sailing tax season or a ta­x-time nightmare (we really don’t want you to have a tax-time nightmare). Getting a jump on your year-end tax returns should also involve considering an outsourced accounting service, or an outsourced controller to make sure your taxes (and overall financial records) are error-free. Not only is it cost-effective to hire an outsourced bookkeeping service for your year-end tax returns, but also to help your finances stay on track year-round. They can also:

• Manage the audit process, so you don’t have to take time out of your busy schedule
• Cater financial services to fit your business needs at an hourly or fixed monthly fee
• Offer daily financial record monitoring and cloud access
• Project your tax obligations at year-end and make future recommendations
• Help you avoid any staffing inconsistencies in your accounting department, making your CPA or CFO’s job easier

With the use of virtual bookkeeping services such as Our Bookkeeping Team, you will find that year-end tax time won’t be as chaotic or time-consuming as it would be if you tried to go it alone. We are well-seasoned CPAs, ex-auditors, and controllers with your business strategies, goals, and bottom line in mind.

As you create your own checklist for year-end taxes, we’d love to help you get started on the right foot. Have no idea where to begin? We can help with that, too. Visit our website or give us a call at 213-486-8316 for your free consultation. We’d love to chat about how our services can meet your needs and make tax time a breeze.