These 5 Documents Your Accountant Needs

Published On - February 20, 2020

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These 5 Documents your Accountant Needs

Tax time can be stressful for small business owners, especially when you’re trying to get all of your receipts together and trying to think back on everything you did and spent last year. Although your accountant can help sort and summarize your statements, it will be less expensive if you do it yourself. Here is a list of five documents Consulting Services Inc. will need from you to do your taxes.

  1. Your Financial Statements

Financial statements are your financial documents comprised of balance sheets, income statement, and cash flow statement. For your tax purposes, your income statement is the one our accountants will use the most, but we will also want your  business assets and liabilities.

  1. A List of all Capital Asset Activity

If you have bought, disposed of or sold any of your capital assets in your company during that year, you will have to account for that in your tax return. The accounting software you have will let you print out the list of all of your capital-asset, that list gives our accountants all detail needed to classify any changes. If your listing does not specify the exact nature of the assets being bought and sold, make notes.

  1. Vehicle expense Log

When you use your own vehicle if it’s all the time or sometimes for your business, you would be able to claim a portion of your expenses on your vehicle as a deduction on your business income. The IRS will allow you to calculate it one of two ways:

  1.    Simplified method, will let you apply an IRS-mandated mileage rate to all business miles you would drive in that year. For the tax year 2015, standard mileage deduction would be $0.575 per mile
  2.    Actual expenses method, you would need to add up all your vehicle operating expenses (i.e. gas, lease costs, loan interest, maintenance and repairs, insurance, etc.). Then, divide your miles driven for your business by the total miles driven in that year, then you apply that resulting percentage to your operating costs. That would be your allowable deduction.

Under both of those methods, you would need to keep track of all your business mileage in a log. This can be as simple as writing down dates, any descriptions, and the miles into a blank notebook, or use QuickBooks Self-Employed program to keep track of the mileage and automatically do the  deduction. Whatever method you use, make sure you provide the vehicle log at the end of the year to your accountant.

  1. Home-Office Expenses Summary

If you are using your home as your office and sole place of business and you regularly meet your clients there, you could claim expenses. Those expenses would include a percentage of all your utilities, maintenance expenses, repairs also your home insurance, and mortgage interest or your rent expenses. You would need to calculate your home-office deduction by dividing the square footage of the office space by the square footage of the living area of your house or divide the number of rooms your home office will be using, by the number of rooms in your house. Whichever formula you use, multiply the total home expenses by your home-office percentage. Some accountants will want all of the original receipts, others will want just the summary of your receipts; ask before hand what your accountant will need you to provide so you are ready with those documents come tax time.

You can also use the simplified method to claim your home-office deduction. This method allows you to deduct $5 per square foot of the office space you use in your home for your business.

  1. Mortgage Interest and Property Taxes Form 1098

The mortgage company likely issued you an IRS Form 1098 which at the end of the year summarizes your property-tax payments and mortgage-interest for that year. Your accountant will want this form to claim your mortgage-interest deduction which homeowners are entitled to. Your accountant will also need them as part of your home-office deduction, If you have more than one mortgage, be sure to have a 1098 Form  for each one them.

Everyone knows that tax time can bring about a lot of stress and frustration, but by being prepared and working with us at Consulting Services Inc., we make the overwhelming process of dealing with your taxes easier for you and avoid a few headaches.