JoshWhether you prepare your own taxes, or send your information off to a tax professional to file for you, there is a checklist of items you should keep track of throughout the year to make tax time easier. If you do encounter problems with your taxes, a New York tax lawyer can help you clear up your tax controversy. For starters, use this checklist below to be sure you are keeping up with your paperwork. In general, your paperwork can be separated and organized by two sections: your income and your expenses. When you think about your business in these two categories, it is easier to keep track of your operations.
Business income
Your business income is the gross receipts from your sales or services. Any time you receive money from a customer or client for a tangible good that you make and sell, a good that you buy wholesale and resell at retail price, or a service you offer then you report the total amount of money received. Other income you will report could be in the form of returns and allowances. Also consider any interest your business is accruing as income, such as interest on a business checking account or savings account. If applicable, keep track of your costs of goods sold to report, such as your inventory, items removed for personal purposes, or materials and supplies.
Business expenses
Your business expenses that you need to keep track of are essentially anything you purchase that benefits the operations of your business. Expenses can be anything from advertising, phones related to business, computer and internet expenses, local business mileage, or travel expenses such as airfare, hotels, and meals. Furthermore, expenses on your business can also be in the form of commission you pay to a subcontractor, insurance costs, interest expenses (on mortgages or loans). and fees paid to professionals such as accountants and lawyers. Expenses are also tangible items like office supplies. If you are a manufacturer, your expenses will include all the cost of materials to produce your final product. If you are a retail owner, your expenses will include the cost of wholesale pallets of items to resell. You may pay employees, which are an expense to your business. Other expenses include repairs, and maintenance of your office. If your office is in your home, you can report the square footage, hours of use, mortgage interest or rent paid, and utilities. Basically anything you expend on our business is considered a business expense and reportable in your taxes.
Stay organized
For some business owners, it is easy to pile up receipts and invoices to compile and organize one time a year. Other business owners file business income and expenses on a weekly basis, so they whittle away at the task a little at a time rather than all at once. Whatever process works for you, just stay organized and you will find success when it comes to the first step of filing small business taxes.