We are dedicated to serving the needs of ex-patriots from the United States currently living in Alberta.
The evolving nature of the US tax regime, and its pursuit of all US citizens outside the territorial borders of the US, puts unique hardships on ex-patriots.
We are here to help those US persons needing taxes filed or advice on inheritance matters.
Need To Get Caught Up On Bookkeeping? Here’s How.
It’s easy to let overdue bookkeeping pile up. But, as tempting as it is to ignore, it’s worth setting time aside to catch up on your bookkeeping as soon as possible.
Overdue bookkeeping can result in you missing out on tax deductions available to your business, or worse – filing after the tax deadline and risking a fines.
Although we offer a Catch Up Bookkeeping Service here at AMT Solutions, we know that some business owners prefer to attack overdue bookkeeping on their own.
To help, we asked Kyla from our catch-up team for some advice. Her step-by-step process below will help you get organized and caught up on your bookkeeping for the year as quickly and easily as possible.
1. Gather Your Receipts
First of, you’ll need to collect all receipts and invoices related to business expenses. Here is a list of the different types of receipts to look for:
Review your customer accounts to ensure that you’ve collected all customer invoices for the tax year. If your business operates using a cash basis accounting method, you only need to send the customer an invoice once they have paid. If your business uses an accrual basis accounting method, you record the amount in your books the moment the sale occurs, even if you haven’t received the cash yet.
Review customer accounts for any bad debt expenses. Under an accrual basis, if a customer doesn’t pay you for work completed, you can write this off as a bad debt expense. In order to deduct the cost of bad debt from your tax return, you will need to prove to the IRS that you have taken reasonable steps to collect the debt but have been unable to recover the amount.
Collect all receipts from any business purchases you have made over the year. Make sure you’ve claimed every available business expense with our comprehensive list of 2014 small business tax deductions.
Review your vendor accounts to ensure that you have paid them all in full. Make sure you have a copy of every bill from each vendor activity and, if you don’t, contact the vendor right away and ask them to send you a copy. These include bills for business activities that are still currently operating in your business’ closing period to ensure these expenses will appear on your year-end financial statement.
2: Reconcile Your Bank Accounts
It’s important to reconcile your bank accounts so that you can identify any errors in your company or bank records. Compare each transaction from your bank statement with the same transaction in your company accounting records to ensure the balance of each account is the same. If they aren’t, identify and fix any errors to ensure that the balance in your bank statement matches the balance in your company records.
Handing over any accounts to your bookkeeper or accountant that aren’t properly reconciled can be costly. If your accountant has to do extra work to reconcile your accounts and fix your books, you will be charged extra in accounting fees. By reconciling your accounts beforehand, you are saving your accountant and yourself time and money.
3: Separate Personal and Business Expenses
We always advise our clients to keep their personal and business expenses separate. Commingling your personal and business expenses in the same account is known as “piercing the corporate veil,” and it can result in unfavorable tax implications.
If you operate a corporation or LLC and you fail to keep your business and personal affairs separate, you can lose the liability protection afforded by your company’s structure – you could become personally liable for business losses.
Managing personal and business expenses in the same account is also a nightmare when it’s time to do taxes or bookkeeping. It can take longer than necessary to sort through personal and business expenses when they’re mixed together.
If you need to separate your business and personal expenses, the sooner you do it, the better. Read our guide on setting up your business bank account. Also, if you’re unsure about whether something is a deductible business expense, learn how the IRS differentiates personal and business expenses.
4: Go Paperless
The IRS requires you to hang on to receipts for expenses over $75.00 for seven years. While you’re catching up on your bookkeeping, make your life easier by creating digital records of receipts, important documents, and other paperwork by utilizing the following services:
Shoeboxed is a service that allows you to scan and organize your receipts. It can also automatically create expense reports from your uploads and turn business cards into online contact lists.
FileThis is a smartphone app you can use to photograph and store receipts, statements, bills, and other documents online.
Evernote’s ScanSnap Scanner is another great tool that helps you quickly scan receipts. The scanner automatically uploads and stores all scanned documents to Evernote.
5: Collect W9s, 1099s, and W2s
Did you pay a contractor more than $600.00 for work during the year? If so, you’ll need to use W9 and 1099 forms.
A W9 is a form that requests a contractor’s taxpayer information. The contractor completes this and returns it to you. You then use the information on the contractor’s W9 to issue a 1099 to the IRS. Put simply, the 1099 is the tax form that the IRS requires to track payments to independent contractors. The deadline to submit 1099s is January 31, and you will have to file a separate 1099 for each contractor that you paid more than $600 to.
It’s good practice to send these in advance to any contractors you think you will pay over $600. A tip to get W9’s right away is to let the workers know that they can get paid as soon as they submit a filled-out W9 form.
If you have company employees that you are paying $600.00 or more for the year, you are required to file W2 forms for each employee. W2 forms are federal tax forms that are issued by employers to state how much each employee has been paid for the year.
6: Have an Accountant Review Your Expenses
If you’re reading this, it’s likely that you wish to do everything yourself when it comes to bookkeeping and filing your taxes.
We hear you as it is the least expensive way to go about things, but we do also strongly advise, where possible, that business owners ask a tax professional to review their expenses before filing a tax return. This helps to ensure there are no errors made or tax deductions missed. Tax professionals can also speak to the IRS on your behalf or represent you in the event of an audit.
If you have any questions about how to catch up on your bookkeeping, just click the “Get Started” button below and we’ll follow-up with you right away.
We are currently taking on a limited number of new clients.
If you’re ready to get your business up to legal standards on the accounting and tax services front, or if you’re taking the next big step into property ownership, then we’re likely a great match for you.
Get started today!