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Get Ready for Year End

It may seem like the end of year is a long way off, but it will be here before you know it!  If you are like most small business owners, you are BUSY and thinking about year end and taxes is the last thing you want to be doing.  I understand.  I’m a small business owner myself.  Some of my clients are still working on taxes for last year, let alone thinking about the current year.  Wouldn’t it be nice – and a lot less stressful – if you could sail into year end with confidence?

Here are 5 things you can be doing right now in anticipation of year end:

- Collect W9s for ALL independent contractors
- Reconcile accounts
- Clean-up your Accounts Receivable
- Clean-up your Accounts Payable
- Track your mileage for 3 consecutive months


Collect W9s for ALL Independent Contractors

In my 20+ years of working with entrepreneurs and small business owners, I can only think of a handful of companies that did not need to prepare at least one 1099 at the end of the year.

Who needs to get a 1099?  Any individual, partnership or unincorporated company to whom you’ve paid a total of $600 or more in the calendar year. 

Keep in mind, most LLCs are NOT incorporated!  An LLC (Limited Liability Company) gives some of the liability protections of a corporation, but it is NOT considered a corporation for tax purposes.  Determining whether a vendor needs to receive a 1099 depends on how that vendor will ultimately file their tax return.  Unless they are filing a Form 1120 or 1120S, you will most likely need to send them a 1099.

The best way to protect yourself is to obtain a W9 from all independent contractors BEFORE you ever give them their first check.  If you haven’t done that already, there’s no time like the present to get it done!  Simply go to IRS.gov to download the most recent W9 form, attach it to an email and ask your vendor to complete the form, sign, and return it to you.  Be sure to follow up on this request, so you have a 1099 on hand for all independent contractors before year end.

Note:  All payments made to these vendors should be made out to the name shown on the W9. 

As you receive the completed W9s from your vendors, be sure to update the Vendor record in QuickBooks.  Enter the tax ID number shown on the W9 in the same format as shown on the W9.  Unless the W9 indicates that this vendor is INCORPORATED, you should mark the name as “eligible for a 1099”.  QuickBooks will automatically determine if the amount paid meets the $600 threshold.  When in doubt, mark the box!


Reconcile Accounts

Now is the perfect time to make sure your accounts are up-to-date and reconciled.  Which accounts should you be reconciling?  All Balance Sheet accounts – particularly your bank accounts (checking, savings, money markets) and credit card accounts.

Even if you have the luxury of a daily download from your bank into QuickBooks, it is a “best practice” to make sure that everything has been recorded, reconciled and you aren’t carrying a lot of old outstanding transactions.


Clean-up Your Accounts Receivable

As you customers move closer to year end, they will be looking for write-offs for their business.  There’s no time like the present to make the push to collect on some of your older straggler accounts receivable.  It’s a win-win proposition!  Your customer gets the tax write-off in the current year – and you get paid!!


Clean-up Your Accounts Payable

The flipside to cleaning up your accounts receivable is for you to clean-up your accounts payable.  Do you have “unpaid bills” showing on your accounts payable report?  If so, are those bills still due to your vendors, or were those bills paid by check or credit card and simply weren’t removed properly from the Accounts Payable list?  You certainly don’t want to pay a vendor twice for the same goods or service, but your reputation as a business owner depends on your timely payments.  Now is a great time to make sure your bills are caught up and paid – and you get the added benefit of taking a tax deduction in the current year!


Track Your Mileage for 3 Consecutive Months

You probably already know that if you drive your personal automobile for business purposes, the IRS will allow you to write-off those miles as an expense of your company.  For 2017, the standard mileage allowance is $.535 for every business mile driven, but there’s a catch!  Your miles must be documented, in writing.  You can use an inexpensive mileage log available at your local office supply store or any one of the handy apps available on your phone.  Personally, I like the “MileIQ” app (https://www.mileiq.com/invite/TMTQD) which tracks every drive and you simply decide whether the drive was “business” or “personal”. 

Why start now?  Because if you track your miles for three consecutive months, the IRS will allow you to extrapolate those miles and apply them to the entire year.  So, by starting now and simply tracking October, November and December, you will have satisfied the 3 consecutive months rule.


Barbara Starley is a child of God and loves the Lord.  She is a wife, mom, business owner, best-selling author and speaker.   Barbara is not your typical CPA.  As a Certified QuickBooks® Pro Advisor she has served hundreds of entrepreneurs, small business owners and churches in the areas of QuickBooks® set-up, training and troubleshooting.  Her patient demeanor and in-depth knowledge is the perfect combination to turn confusion into confidence and to help her clients become more successful and profitable.