Bookkeeping During Tax Season
Taxation with Representation
Tax season is a hectic time for most people. Trying to dredge up required IRS documentation is a hassle. Even if you keep meticulous records, you may find yourself rummaging through confusing and perhaps even excessive paperwork. While individuals feel the pressure to be accurate to avoid messes like audits down the road, the heat is on for businesses. From sole proprietorship’s to large corporations, bookkeepers are necessary for tracking inventory, payroll, and all aspects of the company since everything has tax implications. Bookkeepers with proper knowledge of all accounts, as well as assets and liabilities, allow a business to provide an appropriate representation of their financial state.
Setting up for Success
The crucial time for taxes may only come once a year, but bookkeepers must keep it in mind all year long. If you are a larger corporation, it’s quite likely that you have an army of accountants at the ready, pushing the proverbial pencil on all accounts. However, most American businesses are smaller and may only employ a few bookkeepers. It is vital to maintain organization throughout the year to be prepared. For smaller firms, drawing the line between personal and business finances can be a blur. It is essential to maintain an independent business account through which the bookkeeper can monitor business expenses and revenues. Tracking the equipment and assets of the business allows bookkeepers to amortize and depreciate regularly. Keeping these two things in mind means there are no nasty surprises when the IRS comes knocking. If you stay ahead of the game, you will never be caught off guard. It may even be a good idea for small businesses to follow the path of large corporations and prepare quarterly reports to keep up to date with all accounts.
Knock, Knock, It’s the IRS
If your bookkeepers have appropriately adhered to the Generally Accepted Accounting Principles (GAAP), then it is unlikely that the IRS will show up on your doorstep for an audit. However, many things can alert them, and even the most balanced bookkeeper has to maintain a high degree of alertness during the tax season. Accurately recording all the receipts of the business is essential, especially if there is a significant change in gross receipts or revenue. Correctly recording receipts is especially necessary for cash flow heavy business that the IRS may already be inclined to audit. In this same vein, companies must make sure that they continuously balance their books throughout the year. Reconciling your accounts will help to avoid that unwanted knock. Finally, bookkeepers must have proper documentation of payroll and payroll taxes. When classifying employees in the small business environment, delineation is critical. Are they employees in the typical sense, independent contractors, or consultants? As with all bookkeeping, distinctions matter, and adequately paying and monitoring payroll taxes helps to mitigate unnecessary exposure. Tax season is upon us, if you need further information or help, please contact Alron Enterprises, Inc today.
by Nick Climan – Content Creator for Half Full Marketing
How Alron Can Make a Difference
If you’re in over your head, get help from a professional accountant. Someone who knows the world of business numbers will ensure you aren’t missing anything important, and save you from major headaches down the road. Here at Alron Bookkeeping, Inc., a subsidiary of Alron Enterprises, Inc., we simplify accounting for you, so that you can focus on what matters most: growing your small business. Let our bookkeeping specialists handle your accounts and put your mind at ease. Contact us at 321-951-7626 or by emailing [email protected]. We look forward to working with you!