Lily Tran is the founder of TaxUSign, a virtual tax firm that assists individuals and business clients across the United States. She has been featured on Bloomberg Tax and Forbes, among many other publications. As a tax expert, we asked Lily to identify what she considers to be the five essential things any business owner should organize and have to be able to file business taxes on time.
Bookkeeping is the process of tracking your company's financial transactions. Preparing an accurate tax return depends on your bookkeeping. Your tax return will be incorrect if your bookkeeping is a mess. If you do your own bookkeeping, make sure to get your books reviewed.
Check your paycheck withholding
The IRS website offers a tax withholding estimator calculator. Use the IRS website to identify whether the right amount of tax is withheld from your paycheck. Make sure to report any virtual currency and/or foreign accounts. If a taxpayer does not properly report income then they can face tax consequences of virtual currency transactions and can be audited for those transactions and, when appropriate, can be liable for penalties and interest.
Keep track of letters from the IRS
Keep records of letters received from the IRS to avoid a delay in processing. In January 2022, the IRS will send Letter 6475 for the 2021 stimulus check and Letter 6419 for the advanced child credit payments. Make sure to keep these letters for your tax records to prepare your 2021 tax return and aim to file your business taxes on time.
Gather your tax documents before preparing your tax return
Review your tax documents as they start coming in the mail. Read through them thoroughly to make sure everything is correct. If any information is inaccurate, be sure to contact the payer immediately to request a correction. You can download a year-end small business checklist at TaxUSign’s website.
Inform your tax professional of any changes in 2021 that may affect your 2021 tax return
A new year can bring new changes. If you had a baby, got married, retired, or started a business - these events can affect your taxes. In January, TaxUSign can provide you with a tax organizer to help you add changes and gather tax documents.
To learn more about filing your taxes and receive additional information, join an upcoming free Grow with a Pro session where you can join Lily and ask questions about taxes and bookkeeping.