Now that you've categorized all your transactions and made any necessary adjustments, you have a full picture of the income earned during your financial year, and the expenses incurred to support that income. You also know what your business has, what it owes, and what’s left for you, the owner!
Take a moment to review your year-end financial statements. If this isn’t your first year in business, compare your business’s performance this year to its performance last year, and take some time to think about your goals for the year ahead.
This is also a great time to export information to share with your accountant, so they can complete your tax filings for the year. If you don't already have an accountant, take a look at our Wave Advisors services, or tackle your own taxes with a reputable tax software, like H&R Block.
Here’s what you should plan to share with your accountant
You'll need these four reports from Wave:
- Your Profit & Loss (Income Statement) for the year (Accrual or Cash basis).
- Your closing Balance Sheet at the end of the current year.
- Your closing Balance Sheet at the end of the previous fiscal year.
- Your Account Transactions (General Ledger) (Accrual or Cash basis).
Export all reports in the detailed format, as opposed to the summary format, by toggling to the Details option at the top of the report.
With these reports, you'll have all the information you need for tax calculations, as well as to finalize any other reporting that may be required in your location.
Remember that you can always invite your accountant to access your Wave business as a guest user. Giving trusted individuals like your accountant access as an Editor or Viewer in your business account will allow them access to your business data, and give them everything they need to file your taxes.
Preparing to file your own taxes
There are many advantages to working with an accountant as you finalize your year-end bookkeeping. They may find tax allowances and deductions that can save you more money, and prevent the kind of mistakes that make an audit more likely.
If your business is still growing, however, a CPA might seem expensive, or you may simply prefer to prepare your taxes on your own. If either of these sounds like you, here are some tips.
Taxes are different from country to country, and even more different at the local level, so Wave can’t give you specific tax advice—but we can set you on the right track!
To file your own taxes, you’ll need the following numbers:
- Total Income and Expenses: get these from your Profit & Loss report.
- Fixed Asset purchases: find these on the Account Transactions (General Ledger) report. Your tax software will use the purchase information to calculate Capital/Depreciation allowances.
Not sure whether you should use Accrual or Cash basis reports? Check your prior year tax return, or ask a trusted advisor. You can also learn more here.
Good online tax preparation software will provide you with lots of information about what numbers to include in every part of your tax return, so using tax preparation software is a solid choice. Let the software guide you, and refer to your Wave reports for each of the numbers you are asked for.
If you enter your depreciation expense into Wave before you file your taxes, make sure you allow the tax software to calculate and fill in your tax depreciation on the forms, rather than importing the number from your Profit & Loss report. Otherwise you could be claiming the same expense twice!
Once you've gone through the software flow and filled in all the numbers, look through all the forms, and do a "reasonableness" check to make sure nothing looks out of whack. When you're ready and feeling confident, submit your return, and rest easy knowing that this important task is done!