Best Practices for Tax Preparation
- October 5, 2020
- Posted by: Management inSites
- Categories: accounting, bookkeeping, Finance & accounting, insites
Accurate tax reporting is a key component to the health and well-being of any company. While the accountants and bookkeepers in your company may not actually process your company tax returns, they still have an essential job in the tax preparation process. The importance of tax prep is to make sure the documents are as organized as possible for handoff to the CPA (Certified Public Accountant). Ensuring that everything is correct and orderly can reduce errors and costs. When a CPA has to contact you to review outstanding issues, you will have to pay more for his or her time.
Here are some key items to keep in mind:
- Review your balance sheet and P&L in detail. Look for oddities and discrepancies, compare the numbers to the previous year, and see if there are any major changes that need to be addressed. Make sure reconciliations are up to date and that the chart of accounts is clean (for example, there should be only 1 account for bank charges and not multiple). Ensure that meals and entertainment are separated out as well.
- All uncategorized or miscellaneous expenses should be categorized and coded properly.
- Secure a copy of the property tax return and 1096 (summary of all your 1099s, which are tax forms recording income received as an independent contractor, for which taxes have not been withheld), as well as year-end payroll documentation.
- It is best to have copies of receipts for major purchases in your records, as well as receipts for fixed assets you’re going to be depreciating, and the prior year’s depreciation schedule.
- Provide your CPA with your journal (all transactions) for the entire year.
- It is essential to supply your primary documents (financials), secondary documents (AR/AP and any ledgers for accounts that have had activity during the year), and supporting documents (like bank statements, loan statements, and anything you’ve received from the government regarding tax payments).
- The beginning trial balance should match the ending adjusted trial balance that your CPA provided you the previous year. If they don’t match, it can cause a problem that will carry over the entire year.
- Send the package to the CPA with a cover sheet including bullet points of what has happened to the company throughout the year, any questions you might have, and anything you want the CPA to know about
- Communication is key. Call your CPA and ask any questions you have to avoid errors!
Most importantly, it is good to keep all of the above in mind throughout the year, and not just during tax season. This will make your job easier when the year closes.
Best Practices for Tax Preparation
- October 5, 2020
- Posted by: Management inSites
- Categories: accounting, bookkeeping, Finance & accounting, insites
In our previous post on the topic, we covered some important things to remember when setting up your company in the U.S. market. Beyond operations, sales, and marketing, a manager would be remiss not to focus on how cultural differences might impact the success of a subsidiary.
The U.S. is not homogenous
Unlike several other countries, the U.S. is vast – and not just in its size. Americans tend to break up the country into its East and West coasts, and the Midwest. But there are even more segments, like the South, Pacific Northwest, the Northeast, Florida, and Texas – all of which differ greatly from each other. There are several big cities, countless medium-sized markets, and even more rural or suburban areas. Interacting with people living in big cities will differ greatly from interacting with people in smaller towns. While it would be unwise to generalize, it is best to understand the culture of the part of the U.S. in which you are doing business before having expectations.
Patience is not always a strength among Americans
When in negotiations or conducting business, Americans tend to want to just get the deal done. While many other cultures take their time, get to know everyone involved, and move along at a comfortable pace, those in the U.S. do not always see a need to drag things out. Get ready for what looks like impatience, when in reality it is just a desire to be efficient and effective.
Don’t plan on in-person meetings
At least not all the time. The tendency for Europeans and Asians to conduct most business in person is not the same in the U.S. Phone calls, emails, and now even video conference calls are the norm. Businesspeople like to work efficiently, and don’t gather in person unless it is necessary. First meetings, larger negotiations, and important topics are generally discussed in-person. Otherwise, don’t be offended or surprised if many of your interactions are taking place remotely.
Open-minded over traditions
A positive aspect of Americans in general is their ability to have an open mind. Many other cultures rely heavily on traditions, and act in certain ways because history dictates that they should. That is not the case in the U.S. Americans tend to welcome new ideas and concepts perhaps more freely than their foreign counterparts.
That being said, Europeans tend to rely on strongly forged bonds in which trust is paramount. Loyalty is key. Americans tend to be looser and more pragmatic when it comes to doing business. They don’t necessarily need to have known someone for years to begin working with them. At the end of the day, it’s about getting the deal done.