How to Avoid the Tax Panic
Updated: Oct 15, 2022
If you are like most private practice owners, you have experienced the panic of closing the year-end books. Fortunately, it doesn’t have to feel that way, especially if you follow our year-end checklist to keep you on track.
We have found that there are a few areas that are commonly overlooked by practice owners at the end of the year. Let’s walk through what some of them are so you can avoid making the same mistakes.
Including post-close date transactions
If your credit card closes on December 12th that doesn’t mean you stop recording. Make sure you still include the transactions from Dec 13th to 31st within the year reporting. It makes sense that everything from the year should be in the same place, but it’s an easy thing to miss!
Credit card processing fees
These processing fees can sneak up on you and can be confusing to report. The first step is to be aware of them and recognize how they show up on your account so you can accurately report them on your taxes. It’s possible to go through each transaction every day, but that can be pretty tedious. We typically account for these fees monthly instead!
There’s not much value in recording transactions daily, so we enter a monthly adjustment for the fees. At the end of the year we do an additional check to make sure we are accounting for absolutely everything.
The adjustment looks something like this:
Stripe Fees: Debit $250
Sales: Credit $250
Then we add the Stripe report as an attachment just so you have backup (aka proof!), because the IRS loves records of everything–and so do we.
Reconciling all accounts & payroll Do you have more than one account? Chances are, you do! Think about all bank accounts, credit card accounts, or any loans you may have. If you only reconcile some of these, you aren’t going to have the whole picture or complete records. We have lots of tips and tricks for how to do this, but the best rule of thumb is to use good accounting software like Quickbooks to keep everything organized throughout the year. With everything you are trying to reconcile it can be easy to forget about another piece of the puzzle: Payroll. Make sure you reconcile all those little paychecks–or hire someone to do it for you!
What slips through your fingers at the year-end? How do you avoid panic as you go through your checklist?
If you need help getting your financial life in order, feel free to book a time HERE and see what services would support your unique practice needs.
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