You, Your Bookkeeper, and Small Business Tax Preparation

Stacy Kildal

Stacy Kildal

Contributor at Fundera
Stacy Kildal is owner/operator of Kildal Services LLC—an accounting and technology consulting company that specializes in all things QuickBooks. From 2012-2017, Stacy has been named one of CPA Practice Advisor’s Most Powerful Women In Accounting. Stacy is one of the three hosts for the QB Show and has also been featured frequently on Intuit’s Accountant Blog, Community "Ask the Expert" forums, at various Intuit Academy To Go podcasts, as well as hosting a number of Intuit Small Business Online Town Hall sessions. She is a big fan of working mobile and has been recognized by Intuit as being an expert on QuickBooks Online, having written Intuit’s original courses for the US, Singapore and Canadian versions.
Stacy Kildal

I’m a bookkeeper, not a tax preparer, but that doesn’t mean I don’t have a role in my client’s tax preparation each year. I save them a ton of time getting ready for small business tax preparation by working as a middleman between them and their tax preparer. As we approach year-end, it’s time to start getting those files ready for the poor soul who has to do all of that tax work.

Just kidding! Two of my best friends are CPAs! But still, the thought of doing a 1040—even my own—frightens me on a deep, dark level. That said, I greatly respect the people that do it every year: they’re hardcore. The 300 hour work weeks, dealing with the clients that are upset with a return because it wasn’t what they “envisioned,” having to deal the receipts-in-a-shoebox or difficult clients….

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As a bookkeeper, part of my job is to serve as a translator of sorts between the tax preparer and the client. In this role, I try to make small business tax preparation as painless as possible for everyone!

If you’re a small business with a bookkeeper, take advantage of your bookkeeper’s “translation” skills to help you with your small business tax preparation. Tax season is the perfect time to get these two financial business professionals working together for your business’s benefit. Here are the steps to take to do just that:

Small Business Tax Preparation Tip #1: Introduce your bookkeeper to your tax preparer

Introducing your bookkeeper to your tax preparer is step #1 because it’s the step that will get the ball rolling for the rest of the process. Do this as soon as possible, so they can coordinate on how to handle certain things. Will they do quarterly reviews together? Will the tax preparer want to make periodic adjustments throughout the year, or just at the end? Who will enter these year-end adjusting journal entries? Who’s going to prepare the 1099s? The smoothest (and quickest) tax returns to process for our clients are those where we have a great relationship with their tax preparers. Introduce your bookkeeper and tax preparer to ensure communication is smooth and effective.

Small Business Tax Preparation Tip #2: Stay up-to-date

One of the biggest advantages of outsourcing your small business bookkeeping is that your records are always up-to-date. Accounts are reconciled, income tracked, and expenses recorded. Make sure you’ve given your bookkeeper access to all pertinent documents and information, like credit card and bank statements. If you do part of the bookkeeping, are you up-to-date on your end? Keep up your end of the bargain, so that your bookkeeper can do his or her job. If you and your bookkeeper stay sufficiently up-to-date, you won’t have to deal with the annual paperwork scramble come tax season. If you stay on top of your records, you and your bookkeeper will be able to work together much more efficiently.

Small Business Tax Preparation Tip #3: Share Documentation

Another big part of small business tax preparation is record-keeping. The IRS requires that you keep proof of your income and expenses, and us bookkeepers can help with this by setting up all of your back office processes. We have lots of options for sharing documentation with our clients—we can opt for sharing via Dropbox, Box, Google Drive, or even just by attaching documents directly to transactions in your accounting system. If you and your bookkeeper agree on an electronic document sharing service to work with, you’ll be able to seriously streamline your processes. No more shoeboxes filled with wrinkled, coffee-stained receipts!

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Small Business Tax Preparation Tip #4: Outsource your Payroll

Payroll tax compliance can be a struggle. Because of this, most small businesses outsource their payrolls. And the numbers back them up in their decision to do so—statistics show that 40% of small businesses incur an average of $845 per year in IRS penalties related to payroll. The IRS and most states required that you file payroll reports along with any remaining quarterly payments.  Your bookkeeper, whether they are managing payroll or not, will make sure that your books tie into your returns and your W2s before passing them along.

Small Business Tax Preparation Tip #5: Don’t worry about Sales tax

Another area where small businesses struggle is dealing with Sales Tax. Understanding nexus and compliance—accurately calculating, collecting and remitting payments and returns—is a vital task for many small businesses. Avalara and TaxJar are my two go-to apps for sales tax. With either of these apps, my clients get the peace of mind that it’s taken care of, and their tax preparer gets beautiful, easy-to-read reports that tie directly to the books. Using apps for sales tax will help your bookkeeper do their job and do it well. 

Small Business Tax Preparation Tip #6: Find anomalies

If you haven’t been using a bookkeeper, your year-end might be way off from last year’s and you might not be able to explain it. Because of this confusion, you might want to find a bookkeeper to help identify errors in your process.

Why isn’t this adding up right? is frequently the first question I get from new clients when they reach out to outsource their bookkeeping. Finding the needle in the haystack—or QuickReview, as our firm likes to call it—is the common reason many companies decide to outsource their bookkeeping. When things just aren’t adding up on their own, reaching out to a professional bookkeeper to spot anomalies can help clear things up.

The Bottom Line for Small Business Tax Preparation

It definitely gets a bad rap, but small business tax preparation doesn’t have to be a drag. Well, except for the part where you pay taxes.

But the thing is, if you outsource your bookkeeping or rely on a professional, it’s a breeze. They’ve done it all before, probably a thousand times. So if you decide to outsource and rely on a professional for your small business tax preparation, then you can rest easy knowing that your business’s finances are in caring, capable hands. 

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Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
Stacy Kildal

Stacy Kildal

Contributor at Fundera
Stacy Kildal is owner/operator of Kildal Services LLC—an accounting and technology consulting company that specializes in all things QuickBooks. From 2012-2017, Stacy has been named one of CPA Practice Advisor’s Most Powerful Women In Accounting. Stacy is one of the three hosts for the QB Show and has also been featured frequently on Intuit’s Accountant Blog, Community "Ask the Expert" forums, at various Intuit Academy To Go podcasts, as well as hosting a number of Intuit Small Business Online Town Hall sessions. She is a big fan of working mobile and has been recognized by Intuit as being an expert on QuickBooks Online, having written Intuit’s original courses for the US, Singapore and Canadian versions.
Stacy Kildal

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