Bookkeeping, accounting and taxation related tasks can be extremely complicated at times, especially for small business owners
Who do not have a big pool of human resource in tax & accounting services department in New York City.
That being said, small business owners tend to save cost of hiring extra people and rather do all the work themselves.
That, of course, is not the best approach for a businessman, reason being that the same energy can be applied in improving the business, increasing its sales and finding innovative ways to increase the profit.
Back in the past, it was not so difficult to understand the taxation rules, however, with every year passing, tax preparation is becoming more and more complex.
Due to the rules and regulations, expiring tax breaks and guidelines for tax inclusion and tax exemption, tax preparation has become truly a professional’s job to begin with.
Hiring an external tax and accounting service can come in very handy at this point.
For proper implementation of taxing and accounting regulations, you must understand and / or choose what sort of entity your business is or should be.
The most common types of small businesses include a
- Sole Proprietorship
- S Corporation
- Limited Liability Company (LLC).
Today’s tax laws are so elaborate and complex that a simple businessman will have a lot of trouble understanding and following all the rules while preparing a simple tax return.
It is fairly difficult to keep track of all the regulations and you might end up missing the benefit of deductions and credits to which you are entitled as being a resident of New York.
An experienced and qualified tax accountant will assist you in tax preparation keeping in mind your unique lifestyle and business needs.
Here, it is important to understand what is Tax Accounting? Don’t worry, we’ll provide you all the answers realistically and you will find legitimate information here that is updated with the latest regulations.
Tax accounting is basically keeping track of funds that are going in and going out from your business.
Tax accounting focuses on preparation of tax returns and payments rather than the preparation of public financial statements.
Records are the foundation of a successful tax filing. A good business owner performs tax calculations on daily bases, keeps track of incoming and outgoing funds throughout the year, rather than only when it is time for tax preparation once a year.
Here, an external tax & accounting services in New York City can be very useful. The purpose of such a service is not only to prepare public financial statements, instead they can help you with:
- Bookkeeping: A well-organized financial bookkeeping that provide meaningful information regarding the profit & loss and business direction, inclination, trends and much more.
- Accounting services: They include from cash flow management to strategic planning till business registration. A good quality accounting service will help you in maintenance of your cash flow, which means you will never lose cash at hand and will also never have too much useless money.
- Tax Reduction Planning: Tax planning must be proactive not reactive. And it is performed throughout the year to develop and refine your tax plan.
- Cloud Accounting: Cloud accounting is an indispensable financial tool for the modern small business owner. This way, you can basically keep track of your accounting without having to go to the office every time there’s a question in your mind or you need to add or remove something in one of your books.
- Estate and Trust planning: Effective estate planning facilitates the proper transfer of assets to your beneficiaries, it also provides security for your surviving spouse, and it can certainly reduce or eliminate the tax due on the transfer of your business and other assets.
- Financial Statement Preparation: The preparation of financial statements involves the process of aggregating accounting information into a standardized set of financials, this is what the accounting service will perform for you. The completed financial statements are then distributed to lenders, creditors, and investors, who use them to evaluate the performance, liquidity, and cash flows of a business and make important decisions concerning your company.
- Tax Preparation: Consulting with an outsourced tax preparation service will make sure that you do not end up inciting an IRS (Internal Revenue Service) audit. Such a service will also help you in reducing any unnecessary payments due to tax, it will be made sure that you only pay what you legally owe.
- Budgeting: To help you plan where the budget should go and where it shouldn’t go. What are the most important places that should get more of the budget? And what areas of the business can return more profit if invested on.
- Sales Tax Services: Sales Tax service will assist in compilation of information and preparation of sales tax returns in an efficient and timely manner.
- Business Plan Development: If your business isn’t running at optimal performance or even if you just wish to make some improvements, a good set of eyes with fresh financial perspective to identify weak areas will be your best bet to devise a plan of action and implement improvements.
- Cash flow Management: Maintaining and managing the cash flow of a business is not a job for an unprofessional, it takes focus and a lot of analysis to bring a smooth flow of cash. A healthy cash flow ensures that the business can pay salaries on time and have funds for growth and expansion of the business. Resources are also available for paying vendor bills and taxes on time.
- Digital Payroll Processing Services: It is better to take payroll service from an external source, this will avoid favoritism as well as any chance of making an error or even a slight mistake in the calculation of salary payment and taxation that comes along with it. One such error can cause tremendous amounts of tax penalties. Don’t take such risks, rather take help of experts who will skillfully and tactfully prepare taxation related to payroll along with payroll management for all employees.
- Business Loan Assistance: Conventional loans usually offer flexible terms and pricing to tax and accounting services. Conventional loans are handled by both traditional banks and even non-banking lenders, and the lending institutions are able to offer lower pricing based on the strength of the tax and accounting service industry loan request. Because accountants are among the most trusted business professionals, this puts them in a positive light for offering additional advisory services to clients
- Business tax return preparation (Sales & Use/Business Property)
- Litigation support
- Who Has to Pay This Tax?
All domestic and foreign corporations in New York City that are:
- Doing business;
- Employing capital;
- Owning or leasing property, in a corporate or organized capacity; or
- Maintaining an office.
What to bring for tax preparation?
You should bring the following documents to the accountant for tax preparation:
- Personal Information (SSN or Tax ID)
- Dependent(s) Information
- Source of Income
- Type(s) of Deductions.
Important information kept throughout the year:
To be able to prepare for taxation & accounting services in New York City, as a general rule, you need all information related to both income and expenses:
- Sales transactions (receipts)
- Interest from bank accounts
- Any receiving that comes in your account at any point in a year.
Keep in mind that ALL income received needs to be reported. So, make sure that you are keeping detailed records as the business receives various forms of payment.
All the expenses need to be tracked and verified. Sure, it might seem like a troublesome hassle to track every penny that is spent, however these expenses can add up to big tax deductions.
Every expense incurred must be supported with proper documentation, such as a receipt or an invoice.
- Marketing costs
- Vehicle expenses (mileage log)
- Fees and commission paid out
- Outsourced services, including Form W-9
- Interest costs
- Office supplies
- Travel, including transportation, hotel, and food/entertainment
- Rent or mortgage
- Utilities, internet, and phone services
- Maintenance or repair work
- Insurance premiums
- Inventory purchases
- Business development costs
- Employee salaries, including Form W-2, Form W-3, Form 940, and Form 941
Some of these forms need to be completed and distributed before it’s time to file your taxes.
For example, employee tax forms and W-9’s for outsourced services need to be postmarked by January 31st for the previous calendar year.
Make sure to hold onto copies of these forms, so they are ready for your tax and accounting services when it’s time to file your taxes a few months later.
It is important to understand your rights as a taxpayer, so if someone or some situation requires you to act in a certain way that is not legally required, you will know and be the smartest person in the room.
Taking a tax preparation service
Taking a tax preparation service can actually help to minimize your tax liability, that once calculated yearly, becomes a big help.
Such a taxation service will help you in preparation of audit presentations. It can even help you protect your real estate.
Overall, hiring an external accounting and tax service will provide you with the following benefits:
- Get your business accounting summary real-time with meaningful information.
- The most important benefit is full financial transparency so the accountants and business owner can collaborate together and help to grow the business.
- Saves time, reduces costs, no need for hiring, retaining and training new employees. Consult a service and keep it forever.
- You will be able to access your business accounting systems from anywhere with guaranteed complete data security using cloud accounting systems.
- No installation of accounting software will be required on business entity.
- By saving time, money and effort of the small entrepreneurs, it is basically providing you more time for more productivity.
- Using the cloud-based accounting system, there will be no chance of theft, loss of data or manipulation of data by unwanted people.
- Preparing financial statements as desired, either daily, monthly, weekly, quarterly, bi-annually or yearly.
- Your accounting and taxation will always be compliant with the Law Enforcement Authorities i.e. IRS, GAAP and other local, state & federal authorities in the USA.
- Dedicated Certified Public Accountants which will give better tax prediction by accurate and daily bookkeeping of business accounting data.
- Quicker and proactive financial analysis which in turn will provide better risk management at time with timely bookkeeping of business accounting.
- Proper and much easier audits due to the accuracy in bookkeeping and other records keeping.
- Individual support always readily available from the accountant or tax expert.
- Providing cost control, an accountant can analyze how you spend money on your business and can give great advice on how to minimize expenditure.
- Expert advice on any sort of tax matters or accounting needs, only one call away.
“Accounting Services means the measurement, processing and communication of financial information about economic entities including, but is not limited to, financial accounting, management accounting, auditing, cost containment and auditing services, taxation and accounting information systems.”
In order to perform accounting services, the foundation of that is to maintain a healthy and top quality record keeping.
An accountant can generally do the following tasks for you, and if you hire an external one will mean that you will be saving a lot of time and energy that will be used in highly focused concentration to prepare the books:
- Reconciling bank statements
- Generating income statements
- Processing payroll
- Planning for taxes
- Maintaining your general ledger, cash flow statement and balance sheet
- Managing accounts payable and receivable
- Structuring your business as a corporation, partnership, or LLC
- Developing capital and expense budgets
What sort of record keeping must I maintain in my business?
It is crucial for the success of your business to maintain complete and accurate financial records.
A proper maintenance of records provide the financial data that helps you operate more efficiently.
A clean, clear, complete, correct and concrete record system will enable you to identify and evaluate all of your business assets, liabilities, income, and expenses.
That information helps you in determining both the strong and weak phases of your business operations and where you stand with your business.
Moreover, the importance of record keeping will seem essential when they are required for the preparation of current financial statements, such as the income statement (profit and loss) and cash-flow projection.
These statements, in turn, are critical for maintaining good relations with your banker, lenders, creditors, and investors.
Finally, high quality records will help you to avoid underpaying or overpaying your taxes.
Aside from that, good records are essential during an Internal Revenue Service audit, if you hope to answer questions accurately and to the satisfaction of the IRS – one thing is for sure, you don’t want to make them your enemy!
What is essential for your success is that your financial records should show how much income you are generating now and project how much income you can expect to generate in the future.
A company’s record system usually does and should inform you of the amount of cash tied up in accounts receivable.
They also need to indicate what you owe for product or merchandise, rent expenses, utility expenses, as well as expenses such as payroll, payroll taxes, advertising, equipment and facilities maintenance, and benefit plans for yourself and employees.
Records will tell you how much cash is on hand and how much is tied up in inventory. They should reveal which of your product lines, departments, or services are making a profit, as well as your gross and net profit.
So, an accounting or tax service will be a great help in maintaining high quality records that provide information that can nurture your business.
The Basic Record keeping System
A basic record-keeping system needs a basic journal to record transactions, accounts receivable records, accounts payable records, payroll records, petty cash records, and inventory records.
The role of an accountant is helpful here as he or she can develop the entire system that is most suitable for your business needs and can actually train you as well in maintaining those records on a regular basis.
These records will form the basis of your financial statements and tax returns, so take them very seriously!
How will I know it is the right time to hire an external tax and acct service?
These days, companies of all sizes such as small, medium and even large companies have hired CFO’s and Finance Managers or Analysts.
- You feel a bit lost in interpretation of the financial books and unable to come up with decisions.
- Your in-house accountant is inexperienced and you fail to see his input.
- You are trying to run the business and all its activities on your own.
- You have made mistakes in accounting or have inadequate knowledge.
- Your accounting methods are obsolete or too slow to keep up.
- Your business requires better accounting and latest techniques.
- You feel the need to digitalize the accounting system.
We are not here to only make money but our passion is to truly help and assist our clients by educating them about everything there is to know about the taxation and accounting for a business.
Following links can be useful in gaining more information and resources for acct & tax needs:
- The main website of IRS (Internal Revenue Service) can be used to download tax forms and publications, as well as guidelines about the taxation.
- Government website for Social Security Administration that can help you with your retirement, medical planning, disability, survivor ship and benefits related queries.
- This website is a gold mine for Small Business owners. It is governed and is basically no less than a degree in Business Administration if studied thoroughly.
- The mission of the Department is to create the conditions for economic growth and opportunity.
- Microsoft’s Money section is the best source for all the needs of a finance interested guy. You can basically get quotes, do research on stocks, can keep tracking of portfolio, news especially news about money, graphs and curves, and online bill payment. Keep informed and on track with a broad range of personal finance topics.
- The CBS has made public this investment super site that provides links to stock quotes, IRA information, financial news, mutual funds, stock recommendations, investment message boards and much more.
- The largest airport foreign exchange, foreign currency, currency exchange, Bureau DE change and foreign money provider. Providing competitive exchange rates, traveler’s checks and online currency converters.