How to Prepare for Your 2021 Tax Filing

Another year and another chapter are about to close, and you know what that means. It’s time to put a bookend on 2021 finances. Before you know it, 2022 will be here, which means your focus should be on financial forecasting and goals. But first, you’ll want to perform your 2021 tax filing. In this post, Bayou Bookkeeping & Tax Services provides tips on doing just that.

How to Prepare for Your 2021 Tax Filing

End of Year Wrap Up

As your fiscal year ends, you should take several steps to close out for the year. Spend time on the front end gathering everything you need to supply to your tax advisor for your 2021 tax filing. First, collect the previous year’s tax returns. You may have a hard copy or electronic file, or you can ask your tax advisor for a copy if they did it last year. Then, collect supplemental documentation, including:

  • any distributions made throughout the current tax year.
  • depreciating assets and amounts.
  • backup documentation for any credits claimed. 
  • detailed mileage logs with dates, times, number of miles, and business purpose. 
  • proof of current year taxes paid.
  • proof of payroll taxes paid. 

Financial and Accounting Information

In addition to the items already covered, you’ll also want to gather documents that show your financial position and explain the crossover between the business and personal accounts. For example, perhaps you covered a business expense from a personal account but never noted it in the books. If this happens, you’ll need to provide documentation explaining and proving what occurred. Additionally, you should also note things like loans, repayments of loans, and similar transactions.

After you’ve gathered your other financial documentation, make sure you prepare a year-end trial balance. Then supply that along with your additional financial reporting to your tax preparer. If your bookkeeping isn’t accurate or up-to-date, you might want to consider using one of our bookkeeping or accounting specialists. Then you can rest assured that everything is on track, accurate, and up-to-date.

Don’t Forget about Recent Legislation

If you deferred payroll tax through the CARES Act, you should have made a partial payment by December 31, 2020. The second half of the tax obligation is due by December 31, 2022. If this or any other temporary tax incentives, credits, or deductions impact you, be sure to discuss them with your tax advisor. 

Finally, when everything else is complete, you can spend some time thinking about what’s ahead and making budget forecasts and financial strategies for the new year.  

How Bayou Helps Businesses

At Bayou Bookkeeping & Tax Services, we provide comprehensive budgeting, accounting, tax preparation and filing, and other financial services to support your business. Additionally, we offer membership packages to reduce hefty out-of-pocket expenses and spread out costs over the year. If you own a business in Baton Rouge, Walker, or nearby, call (225) 442-1137 or request a consultation to learn how we can help with your 2021 tax filing.