You may think that doing your taxes is an excellent way to save money. But the reality is that not only do most people have no idea how to fill out their tax forms correctly, but they also don’t know what all the implications are of incorrectly filling them out. For example, suppose you put in an incorrect Social Security number or wage amount on your form.
In that case, it could result in penalties and interest being tacked onto any refund due to you. This doesn’t happen if an accountant fills out your return for you—it’s one less thing for you to worry about. Here are some more answers to the common questions, “What does my accountant need to do my business taxes?” and “What documents do you need to file taxes for a business?”
Identification Information
A great small business accountant will need identification information about you, your business, and any other owners in the company. This includes your taxpayer ID number, the company’s name, address, and personal identification numbers for yourself and anyone else who is a part of or related to the business.
Previous Year’s Tax Return
Many accountants will need a copy of your previous year’s tax return to fill out the current year’s taxes. If you change accounting firms, ensure that your new accountant gets a copy of this return from whoever filled it out last year.
Financial Statements
Tax preparation software programs are wonderful things for helping accountants prepare your taxes, but they are only as good as the information you provide. The more financial statements an accountant can get their hands on, the easier their job will be.
Income Statement
The income statement shows how much money your business made after you paid expenses for the year. Accountants need to know this because it will determine whether or not you owe any taxes.
Balance Sheet
The balance sheet shows what you have left in your bank account, what bills you owe, and other liabilities you may need to factor in when doing your taxes.
Cash Flow Statement
The cash flow statement helps accountants understand how much money is coming in and going out of the business. This can help find ways the company can save more money rather than spending it all.
Financial Records
Accountants need to know your filing requirements based on which form your business files (Form C-Corporation, LLC, etc.). They also need to see all receipts for expenditures. Keep in mind that accountants usually like hard copies rather than digital ones. Other financial records include the following:
Loan Information
Businesses may also need to provide the accountant with information about business loans, such as when they were taken out and how much it was for.
Asset Information
Your accountant will need information about the assets of your business, including equipment and property. They also need to know about any investments made by the company.
Income Records
Anything that pertains to money or assets goes on the income record. This includes rent, dividends, bonuses, and anything else associated with your company’s finances.
Expense Records
Expenses are anything that can be used to cut costs for your business, from office supplies to marketing materials. Accountants need to know what you have purchased for the business and when.
Deductible Expense Information
If you provide your accountant with the proper documentation, they will help you find deductions for which you can apply. This includes equipment acquired for business purposes and fees paid to professionals (such as accountants).
Estimated Tax Records
Your accountant may also require these records. The estimated tax records will give them a better idea of how much money needs to be paid in taxes each quarter. You might be asking yourself, “How long do I need to keep tax records in Canada?” In this case, you should keep records for at least three years.
Payroll Data
Payroll records include information about employees, such as how much they were paid and their tax identification numbers. As the employer, you may be held responsible for withholding taxes from your employees’ paychecks, so it’s essential to keep good records of wages and salaries.
How to Save Money on Accountant’s Fees
Hire an accountant as early as possible. If you wait until the last minute, there may be no one available to help you finish your taxes on time, resulting in extra fees.
Good record-keeping is key to having a good relationship with your accountant. It also goes a long way toward saving money when filing taxes because accountants will know where everything is located and what needs to be updated or changed. In addition, they won’t have to look for information and pay money for copies, postage, etc.
You might be wondering, “How do I prepare my taxes for my small business?” First, hire an accountant for small businesses or an accountant for tax return preparation. An accountant who doesn’t typically deal with this type of work could end up making mistakes that cost you more money and time than if the work had been done right the first time.
If your accountant charges per hour, be sure to keep track of what you and they are spending so you don’t get charged for unnecessary activities. You should also ask how long tasks will take before asking them to do them so that there aren’t any surprises when it comes time to pay the bill.
All tax records must be kept in a safe place where they can’t be tampered with or destroyed by fires, floods, etc., but not somewhere where they will go forgotten and not be found again until you need them.
Conclusion
As you can see, there’s quite a bit of paperwork involved when dealing with taxes. That’s why it’s so beneficial to find an accountant; they can handle most of the work for you. In addition, if you hire an accountant early on and keep them up to date on all your business transactions, they will be able to do most tasks without any problems.
If you’re running a small business or self-employed, your accountant must know everything about your company to file your taxes correctly and quickly. Do what you need to get all the necessary documentation together throughout the year to make filing quick and painless. It could save you money on accountant fees and postage and copies, which will benefit you in the long run.