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Top 5 Reasons to Outsource Bookkeeping

bookkeepingAs many of our readers are small business owners, we know bookkeeping can be a major headache. It is something we all have to do, and something we are all capable of doing to a degree, but is it really what a small business owner should be doing? Trying to get your business off the ground, keep it profitable, and handle the day to day is what really needs to hold your focus. Here are some reasons why outsourcing bookkeeping might make all the difference for your small business:
 
1) Spend time on your business, not in your business. As the mastermind behind the company, you time is better spent making sales and managing employees. Most business owners do not have the skill set for bookkeeping, which makes it take double or triple the time it should. This is time away from growing your business; this is valuable time you are likely wasting.
 
2) Save money. Yes, of course you will have to pay a contractor to complete your bookkeeping, but you will be able to save on lost productivity which will bring in more revenue. If you are good at what you do, this service will pay for itself!
 
3) Quality of Life. We can’t say this enough! For every business owner, the #1 headache is bookkeeping. Stop worrying about it and let a professional do it for you. You will never be behind, you won’t be stressed to file your tax return, and it will be a weight off your shoulders!
 
4) It will be done right the first time. At the end of the year when you send your numbers to your accountant, they should be asking you questions about what you have provided. Usually the questions open a can of worms, bookkeeping has to be cleaned up, and the additional fees start to accumulate. A qualified bookkeeper will do it right the first time so you can rest easy and avoid unnecessary charges when tax time rolls around.
 
5) See your numbers in real time. At the end of the year when you look back on your numbers it is usually a surprise, but we believe profit, taxes, and finances in general should be based on intention, not luck. If you are up to date on bookkeeping, you should know your profit, meaning you know what bills you can pay, how much money to save, and how much tax is due. You should be able to use your bookkeeping numbers to plan, budget, and project out your business.
 
Use your skills where they are best fit and let a professional handle the bookkeeping headache for you. Take this advice for any part of your business that is not your expertise, like your website, tax return, advertising, or even hiring!

Getting Ready for Tax Season

tax timeIt is that time of year again! Tax season is coming up quickly and it is time to get your tax documentation together. We wanted to take this opportunity to give you guidance on what you need, as well as some tips on common questions we receive from our clients.
 
First, please know that even though IRS has announced a slight delay for electronically filing tax returns and receiving refunds, it doesn’t mean you can’t do your tax return now. We recommend gathering your documentation early and submitting it to your tax preparer so your tax return can be finished and ready to e-file as soon as IRS allows it so you will be first in line to receive your refund.
 
Most of your tax documents should arrive to you by the end of January:

  • Forms W-2’s and 1099-misc
  • Interest and dividend statements (Forms 1099-int and 1099-div)
  • Mortgage interest (Form 1098)
  • Charitable contribution statements
  • Student loan interest paid (Form 1098-E)
  • Education tuition statements (Form 1098-T)
  • Unemployment income (Form 1099-G)
  • Pass through income from trusts, partnerships or S-corporations (Form K-1)

 
Any document labeled “Import Tax Information” on the envelope should be given to your tax preparer. Some investment documents won’t arrive until mid-February if you have sold stock, so keep an eye out for forms 1099 investment packets, or download them from your online investment account.
 
If you are self-employed or have rental income, make sure your documentation is ticked and tied. Add up all of your income and list your expenses out by category and location. If you use QuickBooks, be sure your bank accounts are reconciled for the year before sending a backup to your tax preparer. Most firms will charge for bookkeeping time, so review your documentation before sending it in to catch any errors on your own.
 
Below are some tips in response to some of the common questions our firm gets each year:
 
1) Non-Cash (Goodwill) Charitable Donations

  • To be able to take a deduction for non-cash charitable contributions, you must keep a detailed list of the items you donated as well as have receipts for the charities.
  • The deduction amount is the current fair market value of the items.
  • Visit www.itsdeductible.com for a free fair market value calculation.

 
2) Out of Pocket Medical Deduction

  • The medical deduction on Schedule A is for after tax money used to pay medical expenses and must exceed 10% of your adjusted gross income.
  • This includes prescriptions and doctor copays, but does not include over the counter medication.
  • If you pay your medical bills through a health savings account or FSA, they are not deductible.
  • Bring us a list or a total for your out of pocket medical bills, not all of your receipts (you keep those for your records).

 
3) Cost Basis

  • Form 1099-B is issued when you sell shares of stock.
  • Many brokers don’t keep track of what you originally paid to buy the stock, so you have to figure this out yourself.
  • We need the cost information to determine if you have a gain or loss on the sale of your stock.
  • You can search for original purchase statements, call your old broker, or look for the historical cost online if you know the original purchase date(s).

 
For a more detailed list of documents needed, see our Tax Source Docs list on our website. If Stevens & Associates is your tax preparer, be sure to fill out our annual Engagement Letter and Interview Sheets. These are available in the General folder on your Secure Drawer portal and they were also emailed to you earlier this week.
 
We hope you feel prepared for this tax season and look forward to seeing you at our office!

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