Year-End Tax Readiness: A Checklist for Businesses

Now is a good time to begin preparing to file your business taxes for 2023. Accurate and organized financial statements will make that process easier and help ensure you optimize deductions. As you review your various statements, you will also get insights into planning for the upcoming year.

The following is a list of key financial statements you should gather and review and what to look for.

1. Bank Reconciliations: Reconciling your bank statements should be a monthly task to stay on top of your financials. Verify all transactions for accuracy and identify and resolve any unusual transactions and stale checks. Information to look for in your bank statements includes:
   • Purchases - to identify potential deductible expenses.
   • Contributions of all kinds, including money invested in the business.
   • Significant acquisitions like buildings, improvements, furniture, and equipment.
   • Charitable contributions

2. Accounts Payable and Receivable: Are you optimizing cash flow?

• Analyze accounts payable or liabilities to accurately report debts owed.
• Look over accounts receivable for money owed to you.

1. Inventory Management: R&A recommends a physical inventory count at year-end. Start the new year with clarity about your inventory, update prices, and review costs
2. Depreciation: Ensure your business distributes the cost of long-lived assets evenly over their lifespan.
   • Review all acquired assets for accuracy.
   • Update your asset list to reflect sold or purchased items.
   • Gather all sales and purchase documents.
   • Update the depreciation schedule, ensuring accurate listing on financial statements.
3. W2s: Reporting employee wages.
   • Ensure correct preparation of W-2 forms for employees and account for bonuses.
   • Include medical insurance payments made by the company for owner wages.
   • Issue 1095s for employees who received insurance payment throughout the year.
   • Incorporate retirement and 401k contributions.
   • Verify accuracy in federal income, social security, Medicare, and state income taxes.
   • Scrutinize employee reimbursements such as home office equipment, fuel, or moving expenses included in employee contracts.

6. 1099s: Ensure payments are reported for non-employee services exceeding $600. Here are some of the forms:

• 1099-Misc - For miscellaneous income like freelance payments, royalties, rents, and payments to attorneys.
• 1099-NEC – For non-employee wages such as fees and commissions. If you're working with freelancers, make sure you're familiar with the tax implications. You can learn more about these in our blog on Employee vs. Freelancer: Tax and Financial Implications for Business Owners.
• 1099-Int – For interest income on investments.
• 1099-Div – For dividends received.
• 1099-G – For government payments such as unemployment or tax refunds.
• For reporting wages for services rendered, follow these steps:

1. Collect W-9 forms for accurate tax information for 1099s.
2. Check for accuracy of all income paid.

If you need help preparing for and filing your business taxes, contact the professionals at R&A.