Happy Tuesday Folks!
Welcome back to another edition of The Contractor Finance Playbook.
We’re head first in October and tax season will be here before you know it.
This week I’m breaking down what you need to do before the end of the year to make tax season feel like a breeze.
Let’s dive on in!
Get Your Bookkeeping Caught Up
If your books haven’t been updated in several months or heck even this year, now is a great time to catch up.
Now, you may handle most of the operations in a third-party business management app such as Jobber or ServiceTitan. That’s great, but that data needs to also be reflected in QuickBooks or your accounting software.
Why?
Because the data in your accounting file is what your tax preparer is going to use to prepare your tax return. So, its important that your books are caught up and correct.
So, what are the things you need to do to make sure your books are caught up.
I’ve created a checklist of items contractors should be reviewing to make sure they’re books are caught up for tax season.
Now Through December 31st
Reconcile every account: Bank, credit card, loan accounts through the end of the year.
Clean up the mess: Clear balances in Uncategorized Transactions, Undeposited Funds, and anything sitting in “Ask My Accountant”
Review your biggest costs: Materials, subcontractors, fuel and equipment. Make sure those are categorized correctly.
Review old bills and invoices: Determine what to pay, what to collect and what needs to be written off.
Collect W-9s: for subcontractors and businesses that meet the threshold.
Square up Payroll: Reconcile payroll reports to your books.
In January
File W-2s and 1099s: They are due at the end of the month.
Send Q4 Estimated quarterly payment: Q4 estimated payments are usually due January 15th.
Send Financials to tax preparer: Send your accountant or tax preparer clean financial reporting package
This is about a third of the list because I didn’t want to make today’s edition too long. The full version has 20+ items in a printable, tick box format so you can check off those items in real time once they’re complete.
If you want the full checklist and aren’t currently a subscriber: Get the full PDF checklist: here
*Note: If you are currently behind and or need help getting your books in shape, I provide monthly bookkeeping and catchup services for contractors. If this is you, reply “Books” and I’ll send you more details.
Review Your Quarterly Estimated Tax Payments
One other thing I want to touch on regarding quarterly estimated tax payments.
If you make quarterly estimated payments, confirm what you have actually paid to the IRS this year. It’s surprisingly easy to miss a payment, pay the wrong amount, or assume a payment was made when it was not.
Compare your records with your bank account or payment confirmations.
*Pro Tip: Keep copies of your estimated tax payment calculations somewhere easy to find. Your tax preparer will need them when preparing the return.
Question of the Week
Which item on this list or thing around tax season that bugs you the most?
Want More?
Shoot me an email at [email protected] if you have any questions or requests for topics you would like me to write about. I’m all ears and I respond to all emails personally.
Til next time, cheers!
Preston