I am frequently asked by small business owners how to reduce their tax preparation bill. So I have put together this little list of tips.
- Reconcile all bank accounts and review outstanding checks and deposits for those that have been outstanding for over 6 months to determine whether they need to be re-issued or voided, while staying in compliance with state unclaimed property laws.
- Review accounts receivable aging report for reasonableness, adjust allowance for doubtful accounts, and verify aging report balance ties to accounts receivable account on the balance sheet.
- Perform a year-end inventory count and make any necessary adjustments.
- Review prepaid expenses for reasonableness.
- Review unbilled services for reasonableness.
- Review accounts payable aging report for reasonableness and verify aging report balance ties to accounts payable account on the balance sheet.
- Accrue payroll, if applicable.
- Tie out loan balances to bank statements and verify accuracy of other liability balances.
- Verify balance as of 1/1/12 in retained earnings has not changed from the prior year. Verify against your tax return if necessary.
- Review all income and expense accounts for reasonableness.
- Verify net income on balance sheet ties to year-to-date net income on income statement.