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Tax season should not be a panic event. It should not be a scramble for receipts, a guessing game with invoices, or a last-minute cleanup of messy books. When your financials are organized before tax time arrives, the process becomes simple, fast, and stress free.
Here are key steps you should take now to prepare for tax season. These steps save time, reduce errors, and keep you in control.
1. Reconcile every account
Bank accounts, credit cards, loans, payroll withdraws, vendor payments, and deposits should all agree with your accounting system. If something is missing or duplicated, now is the time to fix it. A clean reconciliation makes tax reports accurate and prevents the IRS from questioning totals later.
2. Clean up receivables and payables
Look at your open invoices and vendor bills. If customers owe you, follow up and collect. If you owe suppliers, verify the balance and schedule payment. Open receivables and payables that are inaccurate will distort financial statements and cause confusion.
3. Categorize expenses properly
Misclassified expenses will take time to fix and may cost you deductions. Make sure everything is coded to the correct category. If something is unclear, label it and review it with your tax professional. Clean books lead to clean returns.
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4. Gather and organize documents
Receipts, invoices, 1099s, payroll summaries, mileage logs, asset purchases, and loan details should be stored where they can be pulled quickly. Digital storage is best, but I still know a few that are tied to paper (shew). A missing document can delay filing or trigger questions later.
5. Review financial reports
Run your Profit and Loss, Balance Sheet, and Cash Flow. Look for anything that does not make sense. Numbers that look wrong probably are. Fix them now instead of sending a problem to your Tax accountant in March.
Tax season is predictable. You know it is coming. Getting ahead of it saves time, money, and frustration. Organized books help you stay compliant and audit ready, but they also give you confidence that the numbers you used all year are telling the truth.
If you need help cleaning up before tax season hits, reply to this email. I can help you prepare so you enter tax time calm, ready, and in control.
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