How to Prepare for a Tax Audit

Being on the receiving end of a tax audit can be a daunting and scary prospect. If you find yourself in this situation, it’s important to keep in mind that it doesn’t necessarily mean that you’ve done something wrong. In this article, we’ll cover the basics of IRS tax audits how to prepare and how professional tax services can help.

What is a Tax Audit?

When the IRS conducts a tax audit, they are looking closely at your tax return because they suspect it might contain errors that need to be corrected. There are three types of audits: 

  • Correspondence audit: this type of audit happens through the mail. It’s the most common type of audit and is designed to address simple errors that can be resolved through additional documents or clarification regarding specific items on your return. 
  • Office audit: This type of audit happens in a local IRS office. You will be asked to bring documentation with you for review.
  • Field audit: In this type of audit, the IRS agent travels to you and conducts an audit in your home, business, or tax professional’s office. This is the most thorough type of audit. 

The IRS will notify you of an audit via mail. They have three years after you file a return to conduct an audit. It’s important to remember the results of the audit are not final and you have the right to appeal decisions.

How to Prepare for A Tax Audit

The key to facing any audit is preparation. Taking time to understand the process and the scope of the audit will help you stay calm and enable the audit to proceed smoothly. Here are some of our top tips on how to prepare:

  • Understand the extent of the audit: Mail audits don’t typically address the entire return while field audits are much more comprehensive. It’s important to start out by understanding exactly what information the IRS is looking for. 
  • Review your tax returns: It’s a good idea to thoroughly review your tax returns, making note of discrepancies or anything unusual that the IRS might have questions about. This will help you answer the IRS’s questions quickly and efficiently.
  • Gather your records: The IRS will notify you about what records or documents they would like you to provide. It’s a good idea to gather these and any other related documents as soon as possible and keep them together. 
  • Get organized: One of the best ways to keep an audit process operating smoothly is to be as organized as you can. Once you’ve gathered your documents, be sure to record and organize them carefully so you know where they are and how they relate to the IRS requests.
  • Be timely: Prepare your responses, advocate for yourself and respond to all IRS requests by the deadline. The IRS will either close your case or propose adjustments. If you disagree with their findings, you have 30 days to appeal.

How a Tax Professional Can Help

The top way to prepare for an audit and ensure a smooth resolution is to engage a tax professional. Tax audits can be stressful, particularly if you haven’t experienced one before. Tax professionals render professional tax services day-in and day-out and have a deep understanding of the intricate US tax system. Here are ways they can help you in an audit.

A tax professional can be incredibly valuable during a tax audit. Here are several ways they can assist you:

  • Expert Guidance and Representation: Tax professionals, like our expert Roanoke CPAs, have in-depth knowledge of tax laws and regulations. They can walk you through the specifics of your case and help you comply with all relevant laws. When you work with a tax professional you won’t have to face the tax authorities on your own. Instead, they can represent you in everything from handling communications, to taking meetings on your behalf. This reduces your stress and give you peace of mind that the audit is handled professionally.
  • Document Preparation and Organization: Gathering your documents can be overwhelming but a tax professional can provide practical support and assurance that the job is done right. They’ll help you collect and organize all necessary documents. Then they’ll review your records for accuracy and completeness, identifying any potential issues before presenting them to the auditor.
  • Audit Strategy and Planning: Tax experts like CPAs can help you craft a strategy for the audit, help you best present your information and address any potential issues. Thanks to their wealth of experience, they can anticipate the questions an auditor might ask so you can answer them confidently.

Prevent Tax Issues with Neely’s Accounting Services 

Working with a tax professional is always a great idea. From reducing stress, streamlining tax returns, or supporting you through an audit, Neely’s Accounting Services is here to help. 

Our expert Roanoke CPAS can provide tax planning advice to help you avoid issues and provide ongoing support for the tax season and beyond. Contact us for tax support today.

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PREVIOUS Roanoke CPAs Weigh In: The Tax Implications of Remote Work

Roanoke CPAs Weigh In: The Tax Implications of Remote Work

As Roanoke CPA professionals, we get quite a few tax questions about remote work. Remote work has become more common for many employees in America. In Virginia alone, the number of people working from home has risen significantly. According to a story by Cardinal News, only 5.8% of the workforce worked remotely prior to the pandemic. Today, that number has risen to 18.2%. 

Today, approximately one-third of the U.S. workforce works remotely in some capacity. Remote workers cite benefits like increased flexibility, higher productivity, low commute times, and less stress. It’s easy to see why remote work is attractive to many.

If you or your employees work from home, there are important tax implications that you should be aware of. Keep reading to see if they apply to you.

What Type of Remote Worker are You?

Remote work is a blanket term that applies to any form of working that’s away from an employer’s home base. Telecommuting is a popular way to work remotely: you work from home or another location instead of going into the office. In other cases, you may need to work away from the office temporarily to attend to a project or complete tasks. 

Whether you’re an employer hiring remote workers, or an employee who telecommutes, it’s important to know that employer and employee location have implications come tax time.

Remote Work and Taxes: What You Need to Know

U.S. workers pay both federal and state taxes. Employees pay income tax based on where they physically live, not where their employers operate. Your federal tax obligation remains the same as if you were both working in the same place. State taxes are a bit more complex and vary from location to location. Here is some important information to keep in mind about remote work:

  • Don’t Get Taxed Twice: If you live and work in a different state than your employer, it’s important to know if your employer has withheld taxes based on their state’s requirements. If so, you are eligible for a tax credit, ensuring that your income isn’t taxed twice. 
  • Are you Eligible for a Return? Some states don’t collect income taxes including:
    • Alaska
    • Florida
    • Nevada
    • New Hampshire
    • South Dakota
    • Tennessee
    • Texas
    • Washington
    • Wyoming 

If your employer operates in a state that does withhold income taxes but you live in a state that doesn’t, you could be eligible for a refund but you’ll have to file a return in your employer’s state. 

  • Convenience of the Employer Rule If you work remotely for a company based in Connecticut, New York, Nebraska, Pennsylvania, Delaware, Arkansas, or Massachusetts you’ll need to comply with the “convenience of the employer” rule to determine how your income will be taxed. Your income will be taxed according to your location only if you can show that your location is at the convenience of the employer, not the employee. Be sure to check the applicable state’s Department of Revenue to find out the relevant specifics.

Get Professional Tax Services for Remote Worker at Neely’s

At Neely’s our knowledgeable Roanoke CPAs are ready to help you with all your tax questions. Whether you telecommute or go into an office, we’ll work to make sure you get the maximum return you deserve. Work with a qualified accounting firm to save time and stress. Call Neely’s Accounting Services and get help with your taxes today.

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PREVIOUS Common Tax Deductions You May Be Overlooking (And The Best Way to Find Them)
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Common Tax Deductions You May Be Overlooking (And The Best Way to Find Them)

As you’re finishing up your 2023 tax returns, give yourself enough time to make sure you’re claiming all the tax deductions you can. That investment could put a nice chunk of change back into your pocket.

A tax deduction, as defined by the IRS, is “an amount you subtract from your income when you file so you don’t pay tax on it.” Less income means less tax that you owe.

Each year, however, many Americans overpay their income taxes simply by omitting deductions they deserve. According to the IRS, Americans who claimed the standard deduction on recent received more than $747 billion in tax deductions, but many of them missed other deductions they deserved. 

Roanoke CPA Firm Weighs In: 5 Commonly Overlooked Tax Deductions 

Tax deductions are designed to help Americans meet expenses for things like child care and medical care and to support charitable giving. Eligibility for these deductions will vary by household and often from year to year. But there are deductions that are commonly overlooked. Here are five of them:

1. Charitable contributions: Few people forget a large charitable donation during tax time. But smaller donations, especially contributions such as clothing or household goods, can add up as well. You’ll need good documentation of your good deeds, and the IRS will ask for a professional “qualified appraisal of the item or group of items” if your donated items were worth $5,000 or more.

2. Job search expenses: If you searched for new job within your current career field, you can deduct some expenses if they weren’t reimbursed by the prospective employer, such as transportation costs, resume printing, and even agency fees. 

3.  Student loan interest: You can deduct up to $2,500 or the actual amount, whichever is less, of the interest you paid on your qualified student loans in 2023 for yourself, a spouse, or someone who was dependent at the time the loan was made. If you paid more than $600 in qualified interest in 2023, you should have received a Form 1098-E.

4. Medical expenses: You can deduction a portion of your medical expenses — that not covered by insurance that exceed 7.5% of your adjusted gross income (AGI). This includes a wide range of costs such as health insurance premiums, copays, prescription medications, lab fees and even some travel expenses. You can also deduct a portion of the cost of your long-term care insurance if it’s not covered by an employer.

5. Educator expenses: Teachers often pay for needed classroom supplies out of pocket. Through the Education Expense Deduction, teachers can deduct up to $300 worth of those expenses from their income for 2023 and 2024. Qualified expenses include books, supplies, and computer equipment used in the classroom.

Work with a Tax Professional to Find All Your Deductions

Navigating instructions and understanding the different requirements for each tax deduction can be a daunting process – but it’s a necessary one. Tax laws can change from year to year, so don’t guess when it comes to your return, especially if you’ve never itemized before.

Using professional tax services like Neely’s Accounting in Roanoke will take the stress out of the process by finding all the deductions you’re entitled to and ensuring that your return is accurate. 

Contact Neely’s for Tax Preparation in Roanoke, Virginia

When it comes to tax services in Roanoke, Neely’s has been the go-to expert since 2007. We offer a full range of professional products at a fair price, and our friendly advisors are always ready to help. Contact us and let us help you get the deductions you deserve.

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PREVIOUS New Federal Reporting Requirement for Beneficial Ownership Information (BOI)
NEXT Roanoke CPAs Weigh In: The Tax Implications of Remote Work

New Federal Reporting Requirement for Beneficial Ownership Information (BOI)

If you’re a small business owner, you should be aware of critical new reporting requirements that went into effect on Jan. 1, 2024. They may require your business entity to report its beneficial ownership information to the Federal government. We’ve covered the important details you need to know. Keep reading to learn if you’re affected by the new requirements and how to fulfill them. 

New Federal Reporting Requirement for Beneficial Ownership Information (BOI)

Beginning on Jan. 1, 2024, many companies in the United States will have to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company. They will have to report the information to the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Department of the Treasury. 

Do I Need to Report? 

Most businesses are small businesses that may need to file. Your company may need to report information about its beneficial owners if it is: 

  1. A corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe; or 
  2. A foreign company and was registered to do business in any U.S. state or Indian tribe by such a filing.

When Do I Report? 

Reports will be accepted starting on Jan. 1, 2024. 

  • If your company was created or registered before Jan. 1, 2024, you will have until Jan. 1, 2025, to report BOI. 
  • If your company is created or registered on or after Jan. 1, 2024 and before Jan. 1, 2025, you must report BOI within 90 days of notice of creation or registration. 
  • If your company is created or registered on or after Jan. 1, 2025 you must report BOI within 30 days of notice of creation or registration. 
  • If there is any change to the required information about your company or its beneficial owners in a BOI report that your company filed, your company must file an updated BOI report no later than 30 days after the date on which the change occurred. The same 30-day timeline applies to changes in information submitted by an individual in order to obtain a FinCEN identifier. A reporting company is not required to file an updated report for any changes to previously reported personal information about a company applicant. Furthermore, if Neely’s prepares your report, the following must be reported to our office no later than 10 days after a particular change so we can file the update report within 30 days to FinCEN.

How Do I Report? 

Reporting companies will have to report beneficial ownership information electronically through FinCEN’s website: www.fincen.gov/boi

It’s important to note that this will be a free filing that companies can complete themselves. However, Neely’s is providing a service in which we will prepare your BOI report based on the information you provide. Please note that services for preparation of your return do not include auditing or verification of the information you provide.

What Could Happen if I Don’t Report?

There are significant penalties for missing filing deadlines, including criminal (fines and/or imprisonment) or civil (monetary) penalties. There is a $500 per day penalty, up to $10,000, and imprisonment of up to two years for the WILLFUL failure to timely file initial or updated reports. 

Taxpayer Responsibilities

Finally, we wish to emphasize that we are making you aware of these new current reporting requirements, and associated risks. Neely’s Accounting will assume no liability stemming from your neglect on not filing this BOI report. If you choose to engage BOI services from Neely’s our firm assumes no liability stemming from your neglect on not providing applicable information as detailed above for filing the BOI report. 

For more information about BOI reporting, and our reporting preparation services, please contact us or stop by our office.

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PREVIOUS 5 Great Reasons to Hire a Professional Tax Preparer
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5 Great Reasons to Hire a Professional Tax Preparer

U.S. tax code is notoriously complex and ever-changing so it’s no wonder that the term “tax season” can provoke stress and anxiety. It’s difficult to stay on top of the requirements and the more complicated your financial situation, the more challenging the process becomes. 

It’s not impossible to do your own taxes. But when you only work with the tax code once a year, navigating it correctly can be a formidable undertaking. Luckily, there are professionals who work with the tax code every day: professional tax preparers and CPAs. 

What Does a Tax Preparer Do?

A tax preparer helps people and businesses prepare and file their tax returns. These professionals are experts in state and federal tax codes, refund calculations, tax forms and more. They work to file tax return correctly while providing their clients with largest refund possible. 

5 Great Reasons to Hire a Professional Tax Preparer

Imagine a year where you didn’t dread April 15. While it can be tempting to buckle down and DIY approach to your taxes, hiring professional tax services from a tax preparer can make that dream a reality. Working with a tax preparer offers a host of benefits, especially when you choose one from a trusted CPA firm. Here’s why hiring a professional tax preparer is a great idea:

  1. Saves You More Money: Many people avoid working with a tax preparer because they’re concerned about the cost. But that cost can be more than recovered when you work with someone who can maximize your tax return. One survey of 2,000 taxpayers found that self-filers received an average of $804 less than people who used a tax professional.  
  2. Helps You Reclaim Your Time: Between work, life and everything in between in can feel like there aren’t enough hours in the day. Why spend your precious free time doing taxes? According to the IRS, it takes the average person 13 hours to self-file their taxes. That’s over 1.5 work days! A tax preparer can cut that time dramatically, giving you time back in your schedule. 
  3. Reduces Your Risk of Audit: While your chances of being audited are slim, the possibility does exist. The US tax code is approximately 2,600 pages long and clocks in at well over 1 million words. When you work with a tax preparer, you’ll have an expert who is familiar with the code and can support you to achieve the best possible outcome.
  4. Provides You with a Trusted Advisor: Tax preparers are available to work with you year-round, not just at tax time. If you want help creating a sensible tax plan, or have questions after a major life change, having a relationship with a tax preparer can help. 
  5. Gives You Peace of Mind

According to the IRS, 84% of people surveyed said it’s unacceptable to cheat on their income taxes and 93% believe it’s a civic duty to pay their fair share. When you work with a professional tax preparer or CPA, you won’t have doubt or anxiety that your taxes were completed correctly. You’ll rest easy know you’ve paid your part, not more and not less. 

Find Excellent Roanoke Tax Preparation at Neely’s Accounting

Neely’s Accounting Roanoke CPA firm has been serving our community since 2007. We believe that hiring a professional tax preparer is a great investment in your well-being. If you’re ready to gain time, money, peace of mind and so much more contact Neely’s Accounting

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PREVIOUS 8 Ways to Avoid Tax Season Stress
NEXT New Federal Reporting Requirement for Beneficial Ownership Information (BOI)

8 Ways to Avoid Tax Season Stress

We get it. Tax season can be one of the most stressful times of the year. For many people, filing income taxes can be a complicated and confusing process that fuels the fear that you’re going to make a mistake.

Don’t let the 2024 tax season overwhelm you. Here are 8 easy-to-follow tax season tips to get you organized and confident.

How to Stay Organized: 8 Tax Season Tips

A little research and forethought go a long way when it comes to prepping for tax season. And the good news is that tax season rolls around every year, so the more you practice these tips, the easier it gets! 

  1. Do enough research to understand your tax obligation. Basically: If you are single, under 65 and earned at least $13,850 or married and filing jointly, both under 65 and earned a combined $27,700, you must file taxes. 
  2. Don’t wait until the last minute. Tax filing season starts Jan. 29, 2024 — that’s the first day the IRS will accept tax forms for processing. The last day to file without an extension April 15, 2024. The longer you wait, the more stress you’ll generate, and being in a rush could lead to mistakes.
  3. Put all your tax documents in one place as they arrive, grouping them by category. Your goal is to have all your critical documents in one central place when you sit down to file. Important documents include but are not limited to: 
    • W-2 forms from a job, 1099 forms from self-employment gigs or a Form 1099-G from unemployment benefits
    • Documents related to debt, such as Form 1098 from a home mortgage or Form 1098-E from student loans
    • 1099-INT form for interest from a savings account or interest-bearing checking account
    • Receipts from daycare expenses
    • Receipts from charitable donations
  4. Check www.irs.gov/credits-and-deductions to explore which tax deductions and credits are available to you. A tax deduction is an expense that lowers your taxable income, such as the interest you pay on your home mortgage or the cost of out-of-pocket medical expenses. A tax credit is a lump sum amount that pays off a portion of your owed taxes, such as the cost of child care or improvements that make a home more energy efficient.
  5. Decide if you will use an online program or paper forms to file your returns. Online programs are faster but probably charge a fee to efile your returns. Paper forms don’t come with filing expenses, but it can take months for them to be processed by the IRS. 
  6. Start with your federal return. If you’re using an online program, you’ll be required to start here. And even if you’re not, you will likely need some information from your federal form to complete your state taxes.
  7. If you think you will owe the IRS, make a tax payment plan. If you get organized and fill out your tax forms early, you’ll have extra time to plan for the expense. Ideally, you will be able save up to pay your tax bill in April, but you could also set up a payment plan with the IRS or take out a loan.
  8. Don’t be afraid to ask for help, especially if you’ve had a major life change in the last year, your finances have grown overly complicated or you’re just overwhelmed. The U.S. tax code is constantly changing and can be difficult to understand. Working with a trusted professional like Neely’s Accounting Service will ease your stress and give you confidence that your taxes are correct.

Contact Neely’s Accounting for Tax Season Support

For over 30 years Neely’s has been Roanoke’s trusted source for tax services and tax preparation. Contact us today to learn more about how we can help you avoid tax season stress.

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PREVIOUS Tax Planning for the New Year: Setting Financial Goals 
NEXT 5 Great Reasons to Hire a Professional Tax Preparer

Tax Planning for the New Year: Setting Financial Goals 

Financial goals make excellent new year’s resolutions. And now, before the new year actually arrives, is the ideal time to think about your financial goals for 2024 and how those goals can contribute to a more effective tax strategy.

Maximize Tax Deductions and Credits

When you combine tax planning with a comprehensive financial plan, you can protect your money from unnecessary tax burdens. That means there’s more money available for your short-term and long-term needs and wants.

A good place to start is understanding the difference between a tax credit and a tax deduction.

A tax deduction is an expense that lowers your taxable income, such as the interest you pay on your home mortgage or student loans, out-of-pocket medical expenses and moving expenses from a job. 

A tax credit is a lump sum amount that pays off a portion of your owed taxes. These include the Earned Income Tax Credit for lower-income working families, the Child and Dependent Care Credit that offsets the cost of child care and credits for improvements such as solar panels that make a home more energy efficient.

Neely’s Accounting Service can help you research which tax deductions and tax credits you may qualify for now or after a major life event, like getting married or having a baby. Then you’ll have the 2024 calendar year to save records and receipts needed for the next tax year.

Optimize Retirement Contributions

Setting aside savings for your retirement years should be at the top of your financial planning list.

Contribute to your workplace retirement account up to the employer match or to a traditional IRA. Money invested in either can be deducted from your taxable income for the year you made the contribution. In 2023, the IRS allowed a maximum $6,500 in IRA contributions, or $,7500 for people 50 and older.

Strongly also consider contributions to a health savings account, which allows you to set aside money to pay for future qualified medical expenses. Your HSA has three tax advantages: 

  • Contributions to these accounts can be deducted from your taxable income.
  • Money in your account is invested and grows tax free. 
  • You won’t owe any taxes on money withdrawn and used for qualified medical expenses.

In 2024, the maximum HSA contribution allowed by the IRS will be $4,150 for an individual and $8,300 for a family. 

Plan for Major Life Events

Another important piece of financial planning is to be prepared for major life events and any tax implications that come with them, such as getting married, having a child, or planning for educational expenses.

This is where a trusted financial partner, like Neely’s Accounting Service, can help you think through your options and create a financial blueprint that meets your unique needs.

Strategy Matters

Having clear financial goals and aligning them with tax planning strategies can have a significant impact on your financial resources in 2024. Our advisors are always ready to help you with personalized solutions that meet your needs and help you get the most of your financial resources in 2024. Contact us to get started on your tax strategy today.

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PREVIOUS Tax Considerations for Charitable Giving during the Holiday Season
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Tax Considerations for Charitable Giving during the Holiday Season

An end-of-year charitable donation to a nonprofit or church is a meaningful way to celebrate the holidays and support the causes that are important to you. 

To be able to deduct your donation from your 2023 taxes, you’ll need to do a little planning ahead.

  • You must give to a qualified charitable organization – meaning the organization must be registered as tax-exempt under section 501(c)(3) of the Internal Revenue Code. This information can usually be found on the nonprofit’s website. 
  • You must keep good documentation for the IRS. This includes the date you made your donation, the name and address of the nonprofit, and a description of your donation. For monetary donations, that means a receipt or a canceled check. If you donated goods or services, you need a detailed list of each item and its estimated fair market value. (If you donated anything worth more than $5,000, you’ll need an actual appraisal of the item instead of the estimate.)
  • You will need to itemize all your deductions on your 2023 tax return using Schedule A. Ultimately, you will need enough deductible expenses to exceed the standard deduction amount: $13,850 for single filers and $27,700 for married couples filing jointly. 

Here are a few ways to maximize your tax deductions in 2023.

  • Bundled donations, or making two year’s worth of gifts in one calendar year, can be useful if you expect to be just shy of meeting the standard deduction amount on your 2023 tax returns. By bundling your 2023 and 2024 donations this year, you can maximize the tax benefit for this year.
  • Use a donor-advised fund — basically an account that allows you to manage assets for future charitable giving. Your contribution to a donor-advised fund is immediately tax-deductible and you can distribute the funds to the charities of your choice over time. But be mindful of fees associated with these funds.
  • Donate appreciated assets such as stocks or mutual funds that have increased in value. This gives you a charitable deduction plus it can shelter you from paying capital gains taxes on the appreciation.

Through year-end charitable giving, you can help make a difference in your community. According to multiple surveys, local nonprofits receive most of their annual budgets through donations given the last quarter of each year, meaning every gift matters.Charitable giving can also reduce your tax liability when you keep up-to-date and detailed records of your donations to qualified charitable organization. If you have questions, Neely’s Accounting Services has answers. You can count on us for strategic tax advice, so get in touch today.

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PREVIOUS Preparing for the Year-End: Essential Accounting Tasks
NEXT Tax Planning for the New Year: Setting Financial Goals 

Preparing for the Year-End: Essential Accounting Tasks

With less than three months until the end of 2023, now is the time to focus on year-end accounting tasks that will help your business stay organized and ensure compliance with financial regulations. 

Not sure where to start? We’ve rounded up a list of essential accounting tasks to help you stay on top of your finances and end the year strong.

Tax Planning

Now is the time to start planning for tax filing so the process is smooth and straightforward. Stay informed on any changes to the tax codes and make any final adjustments to ensure your business is ready to take full advantage of any relevant tax changes for the 2023 cycle. 

The fourth quarter is your last chance to offset your tax burden with the purchase of any assets or supplies needed for the coming year. Prepaying for needed services in the coming year is also an option. Be sure to document any purchases and save your receipts. Neely’s Roanoke CPAs are ready to help you make any last-minute tweaks to maximize your tax strategy.

Financial Statement Preparation 

After Jan. 1, be prepared to create three key financial statements: A balance sheet, an income statement and a cash flow statement. 

To get ready before the year’s end, you can start reviewing your records. Some questions to ask yourself to stay on track: Do you have all invoices from vendors used in the last year? Did you issue all necessary invoices to customers? Have you reconciled all bank accounts? Taking care of this ahead of time will help you avoid a scramble in the new year.

Inventory Valuation

Inventory valuation calculates the value of any unsold product, and the calculation is needed for year-end balance sheet. The information will also help inform purchases during the coming year, ensuring you don’t overbuy but also have the inventory you need.

There are three ways to do this; each has a different method of addressing changes production costs throughout the year. Neely’s CPAs are skilled at helping you choose the option that makes the most business sense for your unique needs.

Budgeting

Annual budgeting is critical to the health of your business and will help you meet your key business goals for 2024.

Start with a review of recent year-end income statements, including the one for 2023, to assess regular revenue and expenses as well as how inflation affected those numbers from year to year. Then, factor in any known large expenses expected in 2024, including any needed capital expenditures. Understanding your cash flow will help you choose the perfect time to make those big purchases.

Neely’s Is Ready to Help

Feeling a bit overwhelmed at prepping for the new year? The great news is that you don’t have to do it alone! Neely’s Accounting Services has supported Roanoke-area individuals and business for 16 years offering big-city financial services with a hometown feel. Contact us today to see how we can help you. 

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PREVIOUS Navigating Financial Reporting: Understanding the Essentials
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Navigating Financial Reporting: Understanding the Essentials

Financial reporting is crucial for businesses of all sizes in understanding their financial health. Even if you’re the sole employee, generating financial reports helps you stay on top of your goals and can expedite your growth. 

Financial reporting are standard accounting reports that offer detail into how much money a business has, where the money is coming from and how it’s being spent over a fixed amount of time, such as quarterly or annually. 

Why Financial Reporting Matters

By interpreting and analyzing financial reports, managers can assess a business’s performance in real time, make informed decisions about the business and support everything from tax filings to compliance with financial regulations.

Financial reports help you avoid being caught by surprise. They provide credible documentation for regulators, banks, potential investors and other external stakeholders. 

3 Key Financial Reports You Need to Know

The income statement, also called a profit and loss statement, shows all revenue, expenses, gains and losses during a specific period of time. It starts with revenues and calculates the amount of money a business earned or lost during the period by listing and subtracting expenses and then taxes paid.

The term “bottom line” comes from the last line of the income statement, which calculates profit — the net income — for the business for that period. 

The balance sheet shows assets and liabilities and calculates the difference between the two, which is your equity. Overall, it illustrates how well a business can meet its financial obligations at a given point in time. 

It’s called a balance sheet because the two sides of the equation — assets = liabilities + equity — must balance. Balance sheets are used to determine the book value, or net worth, of a business.

The cash flow statement does exactly what it sounds like. It shows cash moving in and out of the business during a determined time period. This documents liquidity — how well a business can pay bills and fund future growth. 

Cash flow is the movement of money and is different than profit, which is what remains after business expenses are subtracted from revenues. It’s useful for managing budgets and assessing business performance. 

Stay on Top of Financial Reporting Standards with Neely’s

Financial reporting requirements do change often, and the team at Neely’s can keep your business ahead of the changes and trends with our expert outsourced accounting or bookkeeping services. Reach out to us today to get started on the best accounting solution for you.

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