The Most Important Documents Needed for Small Business Tax Filings

taxes for small business

Tax season is upon us. Is your small business ready with all the documents you need? 

Determining your tax liability and what your filing requirements are can be tricky and time-consuming. For this reason, many small businesses engage the help of an accountant to ensure they’re getting it right.

As a small business owner, you’re likely very busy. It may be difficult to remember which items you’ll need to gather for your accountant for the purpose of year-end and for tax preparation. In general, there are five main documents that you should be collecting before you make that appointment. These include:

Capital Asset Information

Your capital assets are property that your company owns either for operations or as an investment. Most often, these assets take the form of tangible property that can’t easily be converted to cash and that the business will own for a long time. Examples of tangible capital assets include equipment, vehicles, or land that may or may not have buildings on it. Intangible assets include copyrights, patents, and trademarks.

For the purpose of taxes, it’s important that you identify any new capital assets or those you disposed of during the tax year. If you use accounting software, you can easily print out any capital-asset activity so your accountant has the necessary details for filing your return.

Loan Information

Your accountant will need to know about any new or existing loans you may have. For documentation, you’ll need to have your sales agreement, finance agreement, and the amortization schedule (if one was prepared by your financial institution).

Your General Ledger

For an accountant to do their work, they will require a look into your business’s day-to-day operations. The fastest and easiest way to provide this information is to provide the accountant with the general ledger of your financial statements. 

A Financial Statement

Be ready with a complete financial statement for your accountant. This will include your balance sheet, income statement, and cash flow statement. 

Your Expenses

Having a detailed and accurate account of your expenses will help you get the most out of your tax filing. This not only includes expenses for your office premises, but also any expenses that you may have incurred while working from your home. 

If you use an area of your home for working (and it has to be an exclusive area), you are probably entitled to claim home office expenses when you file your taxes. These might include a percentage of your home’s mortgage or rent, insurance, utilities, repairs, and maintenance. How much you can claim will depend on the size of your home and your work area. In general, the figure is arrived at by dividing the square footage of your office space by the livable square footage of your home. Once you have this figure, your total home expenses are multiplied by this percentage to arrive at the correct deductible portion.

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