The 2015 tax filing season is in the books both literally and figuratively. The deadline has come and gone with another year of positive results.
Corporate Farmer would like to thank all of our wonderful clients for their efforts in compiling information and working hard on their books throughout the year to make this process work. Our system of reporting and recordkeeping has now been in place for well over 40 years and while we continue to refine and improve it, those that are willing to commit to doing it right are rewarded with less stress and more consistent tax results than those that do not.
Next, we would like to remind everyone that just because the taxes are filed for 2014 doesn’t mean it’s time to completely move on to 2015. Take a few minutes to review your books before you put them away and ensure that everything is recorded in accordance with what was filed on the return.
This is important for two reasons. First, if you are ever get audited it is important that your records match the return. The first thing that an auditor will request is your records. Including but not limited to, what method you employ to convert your bank statements to your financials and verifying that the financials match the return. Once the auditor is comfortable that the bank statements, bookkeeping and returns all match, half of the battle is over.
Additionally, the prior year’s figures are the foundation of this year’s planning. What good are your books without having all the numbers in there and accurately classified? Historical figures are utilized to determine how much expense remains in certain areas. For example, at year-end we are often trying to determine what expenses can yet be paid. Those clients that don’t finish out the prior year are lost when it comes to what potential deductions remain.
Another challenging area is interest. Throughout the year it is tough to get an accurate breakdown of the interest and principal on each and every payment. The statement you receive from the bank gives interest based on the due date of the payment. Sometimes these payments are made early and sometime they get made after the due date. The timing of the payment influences the actual amount that is credited to principal and interest. Double check these figures and send corrections to adjust these amounts, keeping your books as accurate as possible.
It’s much easier to do it now, while it is fresh in your mind, rather than waiting until you get audited or needing the information for the following year at planning time. You’ll be glad you did.