Taxes and Your Small Business: Are You Ready?
We don't give small business tax advice here on 1099 mom, but we understand that the topic is an important one. If you are a very new business, and haven't begun to track your expenses and income for the year, it's not too late! If you are an old pro, and simply need to collect all your documentation for easy tax preparation, now is the best time to get started.
While you may have some unique tax needs not addressed by this checklist, here is what I recommend collecting prior to that big sit-down with your CPA or DIY tax program. (If you no longer receive paper statements for most accounts, gear up by getting lots of paper and ink for printing your own, and only print what you need -- selected pages from each statement, for example):
- receipts - These include restaurants, gas pumps, post office, or any other retailer or service you purchased for your business in 2011.
- bank statements - Include all accounts that would report activity of a debit or credit nature in 2010. (Some clients only pay by EFT, for example, and may not pay enough to trigger a paper 1099 later in the year.)
- credit card statements - Print out any statements that show a purchase for your business. (These can be matched against your paper receipts to eliminate duplicates and may provide an easy end-of-year report to help in categorizing expenses by type.)
- PayPal account activity - Some client payments received by Paypal may only be found here, as well as some small purchases you made with your paypal account. (PayPal lets you sort by payments made and by payments received; we suggest sorting them out for easy bookkeeping.)
- Amazon (and other retailers) online account activity - If you use a credit card to make business purchases on Amazon, the statement will likely only show "amazon" in the purchase detail. Use your prior purchase history on the website to determine which purchases can be added to your operating costs. Be sure to take advantage of their downloadable reporting function!
- emails - Yes, these can be very handy when calculating your net profit! Blog conference tickets, for example, usually have receipts issued by email. Be sure that you're putting all business expense-related emails in a separate folder for easy retrieval.
- medical bills - If you had medical costs that would be covered by tax deductions, be sure to contact your local provider to get a list of all expenses paid -- if you don't already have this.
- utility bills - Cell phone plans, internet, and other expenses (more, if you have a home-office deduction) need to be collected at this time.
- mileage from your vehicle - Depending on what method you use to claim auto expenses, you'll either need the logs from your mileage used, or receipts for gas and repairs.
Here are some valuable sites you can use to further your tax knowledge:
*Photo by MoneyBlogNewz via Flickr.