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!
