As we all exhale following the October 16th deadline (except for those of you with ongoing extensions), you would think it would be a time of year when we kick back, relax, maybe indulge in a little retail therapy, and put our office alarms on snooze through the end of the year. If we do that, however, come the beginning of January, we’ll go into a panic with the efforts needed to get the 2023 books ready for the next filing season. This holds true whether you are an individual taxpayer, a business owner with a stack of mounting receipts on your desk, or even a tax return preparer with 200 clients.

If you are anything like me, the way I’ve handled prior years did not allow for an enjoyable start to the new year. I was fraught with stress and paper cuts while suffering hazy vision from staring at the computer screen for too many hours in a day. In November of the year prior, I was guilty of thinking, “Why not just enjoy myself and put in the extra time in January to make up for it?” It sounded so appealing! However, while trying to gather receipts in January and make sense of expenditures I thought I could remember months later, I ingrained a mantra that was repeated a thousand times: “Don’t do this again next year!”

How silly are we to think that after six weeks of intense Thanksgiving, Christmas, Hannukah, New Year’s, etc., celebrations, and all the headaches and stress that accompany them, we will want to put EXTRA time on paperwork? To quote Alicia Silverstone’s character in Clueless, “As if!” So, take this article as the reality kick in the pants we all need, whether we are business owners, Accountants, CPAs, Bookkeepers, or Enrolled Agents… it’s time to be proactive with our duties and get our collective crap together!

Where to start?

The first step I always like to take is to go through the bank account and make sure all deposits have been correctly labeled. Why is this important to highlight? Most business owners have deposits made into their business bank account that aren’t directly from generated income: loans to the business, cash-back rewards from credit cards, interest, and the one that makes those in the tax world cringe a bit, personal funds from commingling habits. You want to take the time to note the deposits into the bank account that should be omitted from generated income or those that should be classified in a manner that will carry a tax consequence.

The second step is to review your expense records and ensure everything is correctly identified. In this day and age, most business owners utilize QuickBooks to keep track of their financial transactions. While QuickBooks can be extremely handy with identifying a vendor and automatically categorizing the expense, watch for expenses that should be split between two categories or anomaly expenses with a vendor that fall into a category that isn’t typical.

If you are an individual taxpayer, start gathering your records for anything that could be reported as a deduction on Schedule A: medical or dental bills, mileage logs for medical or volunteer travel time, donations to charities, etc.

Third, gather all your payroll records and copies of quarterly payroll returns filed with the Internal Revenue Service and state (as applicable). If you are using a payroll service, verify that part of the service you pay for is the filing of the annual W-2s/W-3 and unemployment returns. Remember that even though you pay a professional company to handle your payroll, it is still the business owner’s responsibility to ensure compliance is being maintained. By taking a moment to double-check that these annual duties are being tended to, you can save yourself a lot of headaches with penalties and fines.

Next on the list of year-end organization is to set an intention for the annual returns to be filed. What this looks like is different depending on who you are:

• If you or your business are the taxpayer:
  • Decide if you will use the same tax return preparer you used last year.
  • Reach out to who you do want to use and ask if they would like to receive a copy of your records for the first three quarters of 2023 to get a step ahead.
  • Ask if there are any changes you should make in 2023 based on your 2022 return that need to be enacted prior to December 31st.
• If you are a bookkeeper:
  • Reach out to your clients and make sure they have complied with any outstanding income/expense questions you have posed up to the present.
  • Ask your clients if they intend to use the same tax return preparer as years prior if your office does not provide that service. If they are using the same preparer, reach out and ask if they want the client’s records YTD.
  • Reach out to any accountants or CPAs you have worked with in the past and inquire about potential clients who need clean-ups performed for 2023. It’s a lot easier to start those now!
• If you are an Accountant, Enrolled Agent, or CPA:
  • Start working on your client organizer for the 2023 tax year.
  • Double-check any annual CE requirements you have and make sure you have met the annual requirement.
  • Make sure your records are all straight and up-to-date. Why are we always the last to file our returns on April 15th???
  • If you have the capacity in your office, reach out to your current client list and pass along the “it’s time to get organized” message. It will only make everyone’s life a little easier come the start of 2024!

I hope this message inspires you, your staff, and your clients to take the time now to get organized for the year-end. As Olin Miller said, “If you want to make an easy job seem mighty hard, just keep putting off doing it.”

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