Having to file for taxes can be a daunting experience for freelance workers. This is especially true for independent contractors that may be filing for the first time. However, failing to know what to bring to the appointment can have devastating consequences to both you and your business such as: costly delays, added stress, high interest rates, frequent audits and more.
To avoid these consequences, it’s important to take records of information to an accountant to analyze. If you’re a freelance worker and are struggling to maintain your records continue on to the article below whew the most important documents are outlined in greater detail.
Personal Information
Prior to visiting the accounting appointment, it’s important to gather personal records like government identification and bank account statements. To prepare this information it’s recommended to bring copies of these documents or the filing may be delayed.
Asset Information
The accountant will also need information to your company’s assets. Although some of the needed documents can vary, the most important things are financial records regarding purchases for the business.
This means, you should try to source and submit a copy of any loan agreements, purchases, statements, interest to the accountant. This can help them gauge how much money should be allocated to maintaining the accounts by predicting how much can be claimed.
Loan Details
It’s also important to submit information about money that’s owed to creditors to the accountant. The accountant will need access to this information to gauge the state of the company’s financial records and allocate for it.
Failing to do this can have an impact on the finances for the new year by misallocating the company’s budget. When the budget is not done correctly it can lead to devastating consequences such as higher interest rates, missed payments and added costs. Given how severe this impact can be it’s important to prepare these items and submit them to the accountant.
Income Records
In addition to documents about money, you will also need to submit information about the company’s profits. To account for the business’s income, its best to gather any information regarding payments such as invoices that were made to its accounts.
Additionally, its further recommended to create digital copies of the records so that it can be safely uploaded to a computer filing system on your computer as a way to keep them for the future.
Financial Business Reports
The final thing that all freelancers should bring to the appointment are financial business reports. Meaning, freelancers should take the time to gather documents such as business receipts, bills, invoices, bank statements, credit card statements, and property information. This information can have a greater impact on how the company’s taxes are filed and how much money they are eligible for getting back.
Ultimately, without access to these records the accountant will not be able to accurately gauge the company’s finances and be at risk of misallocating funding in the future.
Previous Year’s Tax Return
It’s also recommended that freelancers submit a copy of their previous year’s tax returns. This is an important document that accountants need because it can help them better understand the company’s financial state and billing practices.
Having to file for taxes can be a time consuming and tedious ordeal. But, failing to prepare the necessary documents can have a significant impact on the business’s production. If you’re a small business owner and are unsure of the documents you need to prepare, feel free to get in touch with one of our professionals.
