How To Prepare Taxes for 2022 Tax Season

 

 

Now that tax season is officially over, it is time to prepare for next year. To have an efficient tax filing in 2022, you must stay organized year-round. 

2022 Tax Season
Check out the info below for professional advice about tax preparation for the 2022 Tax Season.

 

Benefits of Tax Planning

 

Tax planning is beneficial to you in the following ways:

 

  • Get your tax deductions and tax credits. Keep track of all your supplies purchased, depreciation, and mileage. Subtract these expenses from your taxable income. Tax credits also reduce the amount of taxes you owe by reducing your income tax dollar-for-dollar.

 

  • Help decide on using standard deductions or itemizing. Many taxpayers use standard deductions because it is much faster at a flat rate. Itemizing is a longer process, but typically ends up with more deductions. Itemizing takes your tax deductions one by one.

 

  • Determine your tax bracket and plan for tax time. Knowing which tax bracket you fall in is vital so you know your standing and gives you time to prepare. The higher your income is, the more money you may have to pay in taxes.

 

  • Keep a good track of your tax records to file on time. The most important part of tax planning is keeping records of past tax returns and current documents. If you work with a tax preparer, this helps them keep you on track.

 

How to Stay Organized

 

Reduce the amount of paperwork as much as possible. Digitize everything you can and stay orderly with a spreadsheet. You may find that software like Quickbooks works best for you. Take a photo of your receipts while you are on the go. Quickbooks tracks the date, vendor, amount, and payment method for you. This prevents a pileup of printed receipts in your office.

 

When making note of your expenses, accurately add the date, location, amount, and item. Keep food and office supplies separate. Add in the number of miles driven, location, and reason for driving there so that you have good representation for the IRS if needed. 

 

Monitoring and collecting this data also shows your business where it is spending the most amount of money. This helps you determine whether it is a good use of your budget.

 

Should I Hire a Tax Planner or Tax Preparer?

 

A tax planner structures transactions to minimize the legitimate amount of tax you pay. Tax preparers file taxes for individuals and businesses. They ensure you consider all your legal deductions, so you realize your full tax benefit. 

 

PL Consulting has comprehensive interview techniques. Our computerized tax return preparation process assures that your return is complete, correct, and presented to you promptly. We assist you in planning your tax obligations for the entire year, so there are not any surprises at tax time. We ensure you gain the full benefit of your deductions through our intensive education and training.

Questions about our tax preparation services? Call us at 410.764.3731 or contact us on our website. Stay up-to-date with PL Consulting on our LinkedIn.

 

 

Accounting Concept Basics

 

 

Whether you hired an accountant or not, you should understand the basics of accounting concepts as a business owner. Accounting runs on the following concepts.

 

Accounting Concepts

 

What Are Accounting Concepts?

Accounting concepts are like general guidelines to use in certain accounting situations or when an issue occurs. Applying these concepts to accounting work ensures that financial statements are both informative and reliable. They are typically known as Generally Accepted Accounting Principles (GAAP)

 

These principles and standards are deemed acceptable for creating financial statements. GAAP helps create uniformity and consistency of financial reporting that companies should be adhering to regardless of size or industry.

 

Some of the concept names and how they are followed vary slightly from accountant to accountant. The following concepts are important to understand.

 

 

Accounting Year Concept: An accounting year is the time period in which your business completes the accounting process. This can be considered a quarterly, monthly, or annual period.

 

Accruals Concept: The accruals concept means that revenue is recognized when it is earned, while expenses are recognized when the assets are consumed. Auditors only certify business financial statements that have been prepared under this concept.

 

Business Entity Concept: Business owners should keep their finances separate from the business itself.

 

Cost Concept: This concept involves recording the fixed assets of your business on the basis of your original cost during the first year of accounting. Assets minus depreciation are recorded, and rises and falls in the market are ignored. 

 

Going Concern Concept: Businesses are expected to continue running for a long period of time. They should carry out their commitments and obligations unless they are forced to stop functioning and liquidate their assets at “fire-sale” prices.

 

Matching Concept: This accounting principle requires that for every entry of revenue recorded in the same period, an equal expense entry should be recorded. The purpose is that no deferral of expense recognition is shown in later reporting periods. 

 

Materiality Concept: Record transactions when the failure to record them alters the company’s financial statements. Fully represent your finances and cash flow by following this concept.

 

Learn More About Accounting Concepts

Our professionals at PL Consulting and Bookkeeping Plus offer diverse services related to all your financial matters. We can help you with any questions or concerns regarding accounting. 

 

The benefit of working with PL Consulting is that you do not have to choose between different companies if you need a bookkeeper and accountant. Our company is proficient in both with a  focus on small to midsize businesses. We are your go-to resource for bookkeeping and accounting services. 

 

Our team serves the Baltimore, Maryland area and beyond. We customize our services to each client. Your ideas are unique to your business, and we understand that. We help you maintain good records and financial statements.

Questions about how our accounting services can help your business? Call us at 410.764.3731 or contact us on our website to schedule an appointment with one of our accounting professionals. Stay up-to-date with all things financial by following our LinkedIn.

 

Small Business Bookkeeping Tips To Use Year-Round

 

Bookkeeping is the record-keeping of your business’s financials. Without a proper plan of action, your business has a chance of failure. 

 

Although year-end bookkeeping tips are extremely important to your small business, it is important to know your numbers year-round. Set up a clear process and follow these bookkeeping tips. 

 

 

Bookkeeping Tips

 

Understand the Components of Bookkeeping

Before starting your bookkeeping, you must understand what the components of bookkeeping are. The four main components include accounts payable, accounts receivable, payroll, and bank reconciliation. 

 

Additionally, your business bookkeeping may include cash, inventory, loans payable, sales, purchases, owners’ equity, and retained earnings. 

 

Use a Bookkeeping Software

Cloud-based bookkeeping software will make your life much more organized. Using these platforms makes it easier to keep track of your finances. There is no need to keep a paper trail because you can scan the receipts and invoices directly into the software. Regularly run reports to ensure that everything is going as planned.

 

Some useful software that you may want to use includes Quickbooks, Xero, FreshBooks, and Wave. 

 

Set Financial Budgets

To not go over your annual spending limit, set a budget for your business. Create different categories for your expenses including utilities, marketing, donations, travel, and more. Review this budget yearly and adjust as needed. Roll over or invest any money that is left over at the end of the year. Get rid of ongoing expenses that no longer benefit your business. 

 

Analyze Your Financial Data

Keeping your books orderly is not enough to make your business grow. You must analyze business reports. Track your data findings to see the increases and decreases in sales and expenses. These numbers help you understand what is working in your business and what needs to change. 

 

Separate Your Finances

It is best to keep your business finances separate from your personal finances. Mixing the two makes it difficult to keep accurate track of business expenses. You should also get a separate credit card for your business to further separate finances. This will build your business credit, which is important when applying for loans.

 

Get Bookkeeping Help From the Professionals

Not sure how a bookkeeper will help your small business? Learn all about bookkeeper responsibilities first. It may seem easier to perform all the bookkeeping on your own when you are first starting, but once you continue to grow you might need to pass off that responsibility to another source.

 

Our professionals at PL Consulting and Bookkeeping Plus offer diverse services related to all your financial matters.

 

The PL Consulting team serves the Baltimore, Maryland area and beyond. We customize our services to each client. Your ideas are unique to your business, and we understand that. We help you maintain good records and financial statements.

 

Questions about how our bookkeeping services can help your business? Call us at 410.764.3731 or contact us on our website to schedule an appointment with one of our bookkeeping professionals.

 

How to Use Quickbooks

 

It is important to choose the best software that fits your business model for accounting and bookkeeping. Some software allows you to digitally track your finances AND has accounting features. You must consider what is the most convenient and user-friendly software for you and your employees. 

 

Many small business owners start out using Quickbooks because you do not need to be an accounting expert to use it. Here is a guide on the Quickbooks basics.

 

 

Quickbooks

 

Overview

 

The QuickBooks software integrates with PayPal, Shopify, and Square, making it easy to track payments among many other features.

 

There are five plans to choose from, which are all targeted at small businesses and freelancers. Each small business plan allows you to:

 

  • Track income and expenses
  • Invoice and accept payments
  • Maximize tax deductions
  • Run general reports
  • Capture and organize receipts
  • Track miles
  • Manage cash flow
  • Track sales and sales tax
  • Send estimates
  • Manage 1099 contractors

 

How It Works

 

Quickbooks has many features that help you get the job done. Since there are so many features to use, it can get a little overwhelming. If you have specific questions about the features and how they perform, head to their website for detailed explanations. You even can try out demos to make sure you are comfortable with the system before purchasing it. 

 

All the information added to your account makes it possible for you to run reports on the success of your business, profit-and-loss statements, business expenses, balance sheets, and more. You can access some features on the mobile app and complete everything else online. 

 

Quickbooks Payroll

 

Payroll is an optional add-on for your account. Employers get many benefits from using Quickbooks Payroll services. Some services include HR support, worker’s compensation, health benefits, and 401 (k) plans.

 

There are 3 payroll plans to add to your account that are mainly used in small to mid-sized businesses. 

 

Quickbooks Online Mobile App

 

Download the mobile application on your phone to access Quickbooks on the go. You can enter transactions, record expenses, and send invoices anywhere. If you just made a purchase, you can take a quick photo of your receipt and Quickbooks will track the date, vendor, amount, and payment method for you. 

 

The base plan works best with the app because each feature is available on both versions. No matter the plan, though, you can still use the mobile app.

 

Quickbooks and Accounting Help

 

PLCFO’s many years of experience with QuickBooks, but our company can adapt to whatever software works best for your business.

 

QuickBooks can only be upgraded to a newer year or higher version, but if you need to downgrade, historically, there has been no way to do it. We figured out a way to downgrade to an older version of Quickbooks or convert it to a different year if you need to.

 

If you have questions about how to use Quickbooks or need help with accounting, please contact us at 410.764.3731 or visit our website to schedule an appointment with one of our professionals.