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Deducting Business-Related Car Expenses 

Year End Accounting Checklist

 

One thing that is important to do at the end of the year is to close your books. That’s why we put together a check-list of the most common accounting to-dos for the year-end.

 

  • Profit and Loss Statement Review

The first thing you should do before and after this checklist is review your profit and loss statement. It gives you a picture of how you’re spending your money and will show if your expenses are categorized correctly.

Review your P&L again after you reconcile your bank accounts, receipts, and other potential concerns.

 

  • Collect W-9s

Did you use vendors this year For every vendor you’ve spent $600 or more for services, you’re required by law to issue and complete a 1099 form. The 1099 must be filled out and sent to the IRS by January 31st.

 

  • Gather and organize your receipts

As we mentioned in our prior checklist, it’s important to gather and organize your receipts. A shoebox of receipts is not a organization system.

 

  • Gather copies of invoices for assets you purchased so your tax professional has the information needed for depreciation.

 

  • Be sure to copy your thermal receipts because they have a tendency to fade.

 

  • If you use your car for business, write down your odometer reading.

 

  • Reconcile your bank accounts and credit cards

For the year-end, it’s important to make sure what you have in your financial statements matches up with your bank and credit card accounts and your year-end statements. If you are using online accounting software, it’s important your ledger balance matches as well.

 

  • Check your payroll

Make sure you are withholding taxes for fringe benefits, deferred compensation, and end-of-year bonuses.

 

  • Accounts receivables and invoices

There’s a tendency to forget to collect on your invoices if you don’t have a good system or don’t use invoicing software.

 

  • Take physical inventory

Depending on your type of business you may or may not need to take physical inventory. If you do, you’ll want to match it with your end of year balance sheet. It’ll also want to know how much you’ve spent on inventory throughout the year and its current value.

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Actual Expenses vs. Standard Mileage Rate - Are you getting the biggest deduction possible? If you're self-employed and you use your car for business, it’s possible to deduct some business-related car expenses.