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Feeling the year-end crunch? You’re not alone. Prepping your financials this year could be extra confusing—especially if you relocated, received relief funds and loans, or cashed unemployment checks. Get a head start now with our handy guide, and beat tax season stress later.
6 Steps for a Smooth Tax Season
- 1. Get your books in order. If you have any outstanding months of bookkeeping, get in touch with your bookkeeper directly. We’ll work with you to make sure we have everything we need. Then, we’ll triple-check your financial statements so you can avoid the deadline rush. Review your books.
- If you don’t have a full year of bookkeeping with Bench. Talk to us and get caught up for a seamless tax season.
- 2. Prepare to file 1099-NEC forms. If you work with contractors or do contracting work as someone who’s self-employed, you’ll need to file a 1099-NEC form for 2020. To prep for the switch, make sure that you have W-9 forms from all of your contractors, and talk to your bookkeeper about receiving a 1099 report in advance of the January 31 deadline.
- Further Reading: 1099 MISC vs. NEC Guide
- 3. Pay yourself a reasonable salary. Heads-up: if you’re a shareholder of an S Corp or C Corp and are involved in business operations, make sure you were paid a reasonable salary in 2020. You shouldn’t be paid entirely through distributions. One extra thing to note: shareholders of a C-Corp who do not participate meaningfully in the business’ operations must be paid dividends from the company’s profit.
- Further Reading: Guide to S-Corp Taxation
- 4. Collect your year-end tax documents. Gather all your required documents for your Tax Professional. If you’re not sure what you need, use our checklist to keep track of all necessary forms.
- Further Reading: How Long to Keep Business Tax Records and Receipts
- 5. Find an accountant or tax preparer. Because filing taxes will be especially tricky in 2020, we recommend using a CPA or tax preparer. Don’t have a CPA? No problem. BenchTax will connect you to a certified Taxfyle expert. We’ll set up introductions, and they’ll get to work on your return.
- Further Reading: How to Find an Accountant.
- 6. PPP loans and tax season. Did you receive a PPP loan in 2020? This could have tax implications—especially if you won’t be receiving a forgiveness decision until 2021. Consider filing a tax extension. There’s no penalty for doing so, and it may make sense for your business.
- Further Reading: 2020 Taxes: How to PPP, EIDL, and PUA Will Affect Your Taxes
- When Are Taxes Due? 2021 Filing & Extension Deadlines
- The Big List of US Small Business Tax Credits
- How to Double-Check a Completed IRS Tax Return for Mistakes
- How an IRS Audit Works - and How to Prevent One
- What is Form 1040?
- Tax Form 1120—What It Is, How To File It
- A Simple Guide to the Schedule K-1 Tax Form
Book a call and learn how Bench can take tax and bookkeeping stress off your plate for good. You'll get a complete run-down of how Bench Tax works, a custom quote, and answers to any questions you have.
Next: Schedule a call with a Bench Account Manager
Sign up for our Bench Educational Webinar Series! Hosted by Bench experts, we take a deep dive into small business topics. Learn how to read financial statements, or manage cash flow. Our webinars are free and you can watch on-demand.
See below for past and upcoming webinars:
- Dec 9 2020: Bench Education Series: How to Prepare for Tax Season
- Oct 29 2020: Recording: Stripe & Bench Virtual Ask Me Anything
- Oct 23 2020: PPP Forgiveness Update
- Oct 21 2020: Women In Business Panel: Start, Grow and Adapt
- Oct 7 2020: Cash Flow Management
- Sept 9 2020: Increase Your Revenue Through Automation
- Jul 28 2020: Financing Your Ecommerce or Tech Company in a Post-COVID19 Era
- Jun 24 2020: What We Learned About E-Commerce and Online Selling During the Pandemic
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Scroll through to find business optimization guides, tax checklists, and expert-tested templates to help your business.
Why do my accounts sometimes need reconnecting?
When we lose a connection, it’s usually due to changes in your bank’s security. This could be changes in login credentials or changes in any security technology on your bank’s end, for example. Fixing this usually requires any outside access accounts (such as our access) to be reconfirmed by you.
Why do I have more than one bookkeeper?
At Bench you never have only one bookkeeper responsible for the success of your monthly bookkeeping… you have an entire company! We’re a fast moving startup, and we consistently hire smart, ambitious people. Because of that, we often have room for accomplished bookkeepers to gain a well-deserved advancement. This can contribute to your account being handled by a new team member. Other times, another member of the team will temporarily cover for planned or unplanned leaves when necessary.
Whatever the case, we work hard to make sure your books are consistent and standardized between bookkeepers. At Bench, there is always a team lead dedicated to your account to ensure that the quality of your books remain steady. They’re here to ensure that your transition to your next bookkeeper is a smooth one, and that your new bookkeeper knows everything they need to know about your business and books.
Do you outsource my bookkeeping?
Nope, everything is done in-house! We have over 400 bookkeepers working in our offices in Vancouver, BC and Burnaby, BC.
Together, we can help small business owners everywhere. If you know someone who could use Bench to help equip their business for the road ahead, we’ll give you $150 as thanks for doing your part.