Year end is a great time to start getting ready to have your 2015 tax return prepared.
While it may seem a little early to start thinking about your tax return that isn’t due until next year, it’s the ideal time to start planning for a smooth tax return preparation process and you may find some tax savings while you’re at it!
Here are my 6 tips:
Tip #1: Clean up your bookkeeping
Accurate bookkeeping can be one of the biggest obstacles in the tax return preparation process so tackling that now is a great strategy.
For starters, make sure your balance sheet accounts have been reconciled. For example, if you have a mortgage, makes sure mortgage balance that shows on your balance sheet agrees to the mortgage statement received from the lender.
Review you balance sheet and profit & loss statement. While you may not be an expert at financial statements, you’re likely to catch something that is blatantly wrong.
Tip #2: Note any changes to your entities
Did you add an entity this year? Or maybe you removed an entity, or perhaps the ownership of your entity changed. This information can have a major impact on your taxes and tax return preparation.
Tip #3: Identify major purchases or sales of property
If you purchased a rental property, a new piece of equipment, a new business vehicle or something along those lines, have the details of those purchases available. Then do the same for any sales of property.
Tip #4: Gather up your documentation
When it comes to permanent tax savings, the 3 most important words are: Documentation, Documentation, Documentation!
Proper documentation increases the accuracy of the information you provide to your tax advisor. This helps your tax advisor do more for you because they have good information.
Proper documentation also provides the support the government will want to see if you are audited.
Best of all, when you keep proper documentation, you do a better job of identifying all of your deductions so it’s a great way to reduce your taxes.
Documentation may include:
– Receipts
– Meeting minutes for your businesses / entities
– Loan documents between you and your businesses / entities
– Agreements between you and your businesses / entities
– Mileage logs
– Activity logs (particularly in the U.S. for those who claim “real estate professional” status)
Tip #5: Make a list of your questions
As you are reviewing your information, you are going to run into questions for your tax advisor. Start writing down those questions and keep a running list. Then when you meet with your tax advisor, you’ve already got your questions ready and won’t forget any.
Tip #6: Contact your tax advisor now
Have a discussion with your tax advisor about what you can do before the end of the year to reduce your 2015 taxes.
Focus on your wealth!
Tom Wheelwright Provision Wealth (Tom’s firm is my personal tax consultant)