Tax season is fast approaching, and that means it's time to get your finances in order — which includes making sure your accountant has the information they need to do their job. Having the right documents on hand can make the process much smoother for both you and your accountant.
So what exactly should you be gathering? Here's a look at some of the information your accountant needs access to.
This is probably one of the most obvious pieces of information that your accountant will want. That includes things like income statements, balance sheets, cash flow statements, payroll records, expense reports, and anything else related to your business finances.
Income statements should include income from investments, loans, and other sources. Balance sheets should detail assets and liabilities, which should be both current and long-term. Cash flow statements are essential for tracking the money coming in and out of your business, while payroll records will help to keep track of employee salaries and payments.
Additionally, if you have any investments or retirement funds, those documents will also be needed by your accountant. They'll need to be aware of any changes in your investments, including tax implications, so they can accurately reflect them on your taxes.
Your previous tax returns are an integral part of the process as well. These are key documents that allow accountants to see how taxes were handled in prior years and identify any areas where there may be problems or potential deductions that were missed.
It's also a good idea to have all of your tax returns from the last three years on hand, as it may be helpful for them to have a more comprehensive view of your financial history. This is especially true if you're dealing with a complicated tax situation like self-employment, rental properties, or investments.
Be sure to provide them with all of your past returns, as far back as they might request. Otherwise, they won't have a complete picture of how taxes were handled prior to their involvement.
Your personal information is also something that you need to give for tax purposes. This includes things like Social Security numbers for yourself and any dependents, as well as driver's license numbers and other forms of identification. Usually, this information is either requested in person or through a secure online form.
Your accountant will also need to know about any business partnerships you may have, as well as any co-owners or investors. They'll need to know the names and contact details of these people so that they can communicate with them regarding any tax-related matters.
Finally, you'll also need to provide your accountant with any recent life changes that may have an impact on your taxes. This includes things like marriage, childbirth, the purchase or sale of a home, and any charitable donations you may have made. This way, they can ensure that any deductions or credits you're eligible for are claimed.
To learn more, contact an accountant service in your area such as Colasanti & Iurato.