Happy New Year! As the calendar turns to January, many of us are reflecting on the past year and looking forward to our goals and dreams for 2025. And with that, tax season is on the horizon.
For some businesses, tax preparation is as simple and complex as putting a bunch of receipts, invoices, and bank statements in a shoebox and relying on their CPA to piece together financial statements for their tax return.
At Books & Benchmarks, our clients’ financials are updated monthly, simplifying mid-year tax planning by ensuring everything is ready for review. However, this doesn’t mean that year-end bookkeeping is without its challenges.
Challenge #1 – Interest On Loans
From a bookkeeping perspective, how loans are recorded will often look different in year-end bookkeeping. Many loans don’t come with monthly statements and those that do often only record the amount owed, not the amount of principal and interest being paid.
Without that specific information, our bookkeepers usually apply the full loan payments to the outstanding balance on the given loan. However, with the year-end statement, loan payments are split between principal and interest (which is deductible).
Challenge #2 – Tax Forms Are Due!
As an optometry practice owner, your tax obligations start well before April. In January, it’s crucial to distribute W-2s to your employees for their own tax reporting.
Additionally, you need to issue 1099s to not only your independent contractors but also to any vendors you paid $5,000 or more in 2024. QuickBooks can help identify these contractors or your CPA can.
If you want to limit the number of 1099s you have to issue, use credit cards wherever possible to pay your bills and the credit card processor will submit the 1099 for you.
Challenge #3 – Taking Depreciation
Finally, an important decision to make with your CPA is how much depreciation you want to take if you made capital investments in your practice this year.
For almost any purchase an optometry practice might make, Section 179 of the tax code will allow you to take all the depreciation in one year. However, that doesn’t mean you have to take it all or even that you should.
Talk with your CPA about whether to fully expense your equipment this year or save some for future taxes.
Knowledgeable Support Streamlines Tax Prep
One of the advantages of delegating your bookkeeping to an experienced team is knowing that you don’t have to know everything or even wait for your CPA to ask questions. Our experts at Books & Benchmarks will make sure the important things are finished so tax prep is smooth and easy. Contact us today to learn about our optometry bookkeeping services and how we can help simplify tax preparation.
