Financial Nightmares: Avoiding a Spine Chilling Year End!
Are you horrified by the fact that it’s almost year end? Every time I schedule a new meeting for the next month, I’m stunned that I have to open my November calendar to find dates for clients! How is it this close to year end!? It feels like just last month we were welcoming in 2023 and had all the time in the world to get processes in place to have a great new year!
If the finances of your practice feel out of control and you’re panicking because you know you’re approaching year end and you feel ill-prepared, you’re absolutely not alone! Many practice owners find themselves in the same predicament and aren’t sure what to do. Here are a few helpful tips that you can easily do to prepare your books and ease worry as 2023 comes to a close.
Gather Financial Documents
The first step is to gather all relevant information that you’ll need to compile your information in a usable way. All business bank statements, credit card statements, expense receipts, investments, large purchase documents, or retirement accounts are good items to put in one place so you can start compiling data into usable information. Also, if you’ve paid any business expenses personally, it’s a good idea to identify those from your personal statements and make sure they are included in your business records.
Record Income and Expenses
Even if you don’t have a bookkeeper, you can still get your income and expenses organized in a way that can help you or your tax accountant prepare your taxes. You can’t do much until these are organized for the entire year, so it’s a good idea to start while you still have some time! Beginning now will help you from feeling overwhelmed at the end of December. You can use accounting software, hire an accountant or bookkeeper, or use something as simple as an Excel worksheet to get your information organized in a way that makes it meaningful.
Organize Tax Documentation
Make sure you gather any tax documents you receive throughout January and keep them in one location.
You’ll use these as a comparison against what your income shows from the bank. Documents can include W2s, 1099s, and any investment account statements. There are a myriad of documents that entities are required to send to you, so keep an eye on your email and snail mail for any important tax-related documents throughout January.
Communicate with your Tax Preparer (even if it’s yourself)
Make sure you know the requirements for your entity, especially if you choose to file your taxes yourself. The entity type of your company will dictate the forms you are required to file each year.. If you have a tax preparer, make sure you comply with any and all deadlines they set forth for engagement signature or documentation requests. A tax department relies heavily on the participation of their clients to make sure tax season goes smoothly, so the more responsive you can be with your tax preparer, the smoother everything will go. Whether it's deadlines set forth by your tax preparer, estimated payment deadlines, filing deadlines, or extension deadlines, are all equally important to ensure no penalties are accrued and your practice remains compliant.
You can tell yourself you have time, but the end of the year will be here far sooner than you think! It’s never too early to start setting yourself up for success. I know for many business owners, finances are overwhelming, but it’s always easier to stay proactive and make them a priority so the end of the year is far less stressful and spine chilling!
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This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney or advisor regarding your particular facts and circumstances. GreenOak Accounting is an accounting firm that specializes in working with counselors and therapists in private practice. We provide monthly accounting & bookkeeping services, 1-time services and online courses. For more information on our specialized services for therapists please visit www.greenoakaccounting.com