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 the 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 through our Wave Pro listings to find an accountant near you.
Here’s what you should plan to share with your accountant:
Export all reports in the detailed format, as opposed to the summary format, by toggling to Detailed at the top of the report you want to export.
- Your Income Statement (P&L) for the year.
- Your closing Balance Sheet at the end of the current year.
- Your closing Balance Sheet at the end of the previous fiscal year.
- Your Cash Flow Report for the year.
- Your Account Transactions (General Ledger) on an Accrual basis.
- Your Account Transactions (General Ledger) on a Cash Basis.
With these reports, your CPA will have all the information they need to perform your tax calculations, as well as to finalize any public reporting that might be required in your location.
Remember that you can always invite your CPA to access your Wave business as a guest user. Inviting trusted individuals, like your accountant, as an Admin for your business will allow them near-full access to your business data and give them everything they need to file your taxes while you avoid the manual work of exporting reports.
Preparing to file your own taxes
There are many advantages to working with an accountant as you finalize your year-end bookkeeping. A good CPA may find tax allowances and deductions that can save you money, and they may prevent you from making mistakes that could bite you in an audit.
If your business is still growing, however, a CPA might seem expensive and you might be thinking of doing your taxes on your own. If that's you, here are our 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 be using some of the same six reports listed above (in the 'what to share with your accountant' link), so print or export them now. You’ll also need a set of tax forms from your local tax authority or some software to prepare and submit your tax return online.
Good online tax preparation software will guide you and 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 great choice. Let your software guide you, and refer to your Wave reports for each of the numbers you are asked for.
What's the difference between accrual accounting and cash-based accounting?
Depending on where your business is located, you may need to run reports using one or both methods to get the information you need to file your taxes.
In accrual accounting, sales are recorded at the date they are invoiced, and expenses are recorded at the date they are billed, instead of on the date that payment is received or made. Accrual-basis accounting provides a clear measure of your business’s actual profitability.
In cash-based accounting, sales are recorded at the date payment is received from customers, and expenses are recorded at the date payment is made to suppliers.
Wave uses accrual-based accounting overall, but you can change reports to Cash Basis anytime. Learn more here.
Here’s where you’ll find the numbers you need:
- Total Income and Total Expenses: get these from your Income Statement if you file on an Accrual basis, or your Cash Flow Report if you file on a Cash basis.
- Fixed Asset purchases: find these on the Account Transactions (General Ledger) report. Your tax software should use this information to calculate Capital/Depreciation allowances. (If you file taxes on an Accrual basis, make sure you deduct depreciation from your expenses, so you’re not claiming twice.)
Follow the prompts in your tax preparation software, finding the numbers you need in your Wave reports. Double-check everything, and submit when you’re ready.