Follow these steps to ensure your books are prepared for tax filing:
1. Enter all your business transactions into Wave
Make sure every business transaction is entered in Wave.
- Automatic imports: Users on the Pro Plan can connect bank and credit card accounts for automatic transaction imports.
- Manual entry: You can upload a statement or enter transactions manually.
2. Categorize all your transactions
To find uncategorized transactions:
- On the left-side menu click Accounting > Transactions.
- Above the Amount column, click Filter.
- From the Category dropdown menu, click Uncategorized.
- Click Apply.
Review each uncategorized transaction and assign the correct category.
If unsure about how to categorize a transaction, create a new category called Ask my accountant or How do I record this? to temporarily classify these transactions.
3. Prepare your final payroll
- Collect any outstanding expense reimbursements.
- Include year-end bonuses, annual benefits, and any other final adjustments.
- Ensure that the final check date falls within the same calendar year you are reporting for the amounts to be included in that year’s reports
4. Reconcile your bank and credit card accounts
Once all transactions are categorized, you can reconcile your books.
Reconciling involves comparing the activity in Wave against the records from your financial institution. This ensures your books accurately reflect funds received and paid out, making reconciliation a crucial year-end task.
5. Collect important paperwork
To file your taxes, gather the following reports and documents:
- Reports from Wave:
- Profit & Loss report for the fiscal year.
- Balance Sheet as of the last day of the year.
- Additional paperwork:
- Bank and credit card statements as of December 31.
- Receipts or bills for fixed assets purchased during the year (e.g., computers, vehicles, real estate).
- Loan statements as of December 31 and any available amortization schedules.
- Any tax documents you have received.
6. Collect past due invoices
Follow up on any past-due invoices to ensure accurate accounting. If a customer fails to pay, you may want to record it as a bad debt expense. Learn how to Write off an invoice.
If you have questions about getting your books ready, contact Wave Advisors for coaching or bookkeeping services.