Your Best Financial Foot Forward

Blog Post by Sophia Westover, MBA MSW Bookkeeping Group

The 2025 Tax Season is now upon us and for most small businesses the tedious task of pulling together a sensible financial statement for the Tax Accountant is the new challenge. All to often we are pulled in at the last possible minute attempting to pull together the collection of transactions that make up the last 12 months of a business' Balance Sheet and Income Statement. Business owners often struggle to understand the difference between Cash Basis accounting or Accrual Basis accounting. We sometimes see either an over recognition or under recognition of taxable income for the business. This can become even more challenging if a business performed an acquisition in the prior year and delayed the proper migration of the acquired business into the existing accounting ledger. The longer the delay in the year the harder it becomes to pull together clean data and make sense of a true financial picture on the business or personal tax return.

1. Consider pulling in an external Bookkeeping Service to pull together GAAP (Generally Accepted Accounting Principles) compliant financial statements to communicate to your tax preparer.

2. Work closely with the external bookkeeper to make sure they understand your business and capture transactions properly on either the Balance Sheet or Income Statement.

3. Understand timelines of your CPA or Tax Preparer. Usually beginning as early as December, most external tax accountants and CPA firms are scheduling out the tax needs of their existing clients based on their internal staffing. "The early bird catches the worm". The sooner you get in line with your tax preparer with all information in hand and ready to go the sooner your taxes are filed and completed.

4. Make sure to thoroughly read and understand the engagement letter of your Tax Accountant or CPA. I cannot tell you how many times our clients believe something is considered by their accountant when it is not true because it is not called out in the engagement letter.

Tax time does not have to be a tedious time of year. With our services we can maintain a clean financial path that easily leads your tax preparer accross the finish line. We maintain the accuracy and integrity in the financial data and stand by it. We communicate the confidence that your tax preparer should hear from your side of the table. This way when tax season is upon you, your business can sprint across the finish line and you can get back to business sooner!