The end of the year is right around the corner, which means that it is time to get ready for 2022.
Here is our essential checklist to get ready for year-end and tax season:
1) Talk to Your CPA about Tax Planning
One of the best things you can do to make sure that you are in a good place financially for the start of the new year is to reach out to your CPA.
A CPA stands for “Certified Public Accountant.” CPAs are licensed and credentialed to offer accounting advice and prepare your taxes.
Your CPA can let you know what documents you need to start gathering for tax season. They are also in the best position to advise on whether you should make a tax-deductible purchase or donation.
Don’t have a CPA? Write to us at Contact@BlueSparkSolution.com, and we can put you in touch with one.
2) Make a Tax-Deductible Purchase or Donation
If there is something that you have been waiting to buy for your business, now might be a good time to buy it. You can make tax-deductible purchases that will count against your taxable income until December 31, 2021. Donations can also reduce your taxable income as well.
Talk to your CPA about whether a tax-deductible purchase makes sense for you and your business.
3) Max Out Your Retirement Contributions
If you have a retirement account, now is a great time to check how much you have contributed and see if you have reached the max for the year. Many retirement savings accounts cap contributions based on age, income, and account type. Maxxing out these accounts allows you to maximize the tax benefits.
If you have questions on your account type and the max, reach out to your CPA for help.
4) Prep 1099’s
Businesses are required to issue a 1099 form to any payee that has received $600 or more during the tax year, and these forms are due to payees by January 31st.
Save yourself some last-minute time and stress by getting started on these forms now. You will need to have a record of all the payments made and to whom.
5) Prepare Year-End Financial Statements
To file your taxes, you will need to prepare year-end financial statements. These documents summarize your company’s overall performance throughout the year.
If you have been keeping up with your bookkeeping, these statements should be easy to produce. If not, you might need a clean-up. You will need to create an overall picture of your income & expenses throughout the year.
Need help with your financial statements? Schedule a Free Consultation here.
6) Contact your Payroll Company
Now is an excellent time to reach out to your payroll company to ensure they have everything they need to issue W2s early next year. The payroll company might need an updated census of your employees and specific information about any owners or additional benefits.
We hope that this checklist enables you to get the most out of the last few weeks of the year and get a jumpstart on 2022. If you have questions about these six steps, email us at Contact@BlueSparkSolution.com or schedule a Free Consultation here.