As the year draws to a close, it’s an opportune time for businesses to get their financial affairs in order, especially when it comes to taxes. At Ten Key, Inc., we understand that tax preparation is more than a mere compliance ritual; it’s a strategic step towards your business’s financial health and growth. This year, with the introduction of the ASC 842 lease accounting standard, there’s an additional layer to consider in your tax preparation process.
The Importance of Year-End Tax Planning
Year-end tax planning is crucial for any business looking to optimize its financial strategy. This process involves a thorough review of your financial transactions over the year, ensuring that all records are accurate and complete. It’s also the perfect time to implement strategies that can reduce your tax liability, increase potential refunds, and prepare for the upcoming fiscal year.
Why Involve Ten Key?
Involving Ten Key in this critical phase is a strategic decision. Our team of experienced professionals doesn’t just organize your financial records; we delve deep to understand your unique business situation. By having Ten Key onsite, we can efficiently prepare your books and ensure that they reflect your business’s true financial position.
Coordination with Tax Planners/CPAs
Effective coordination between your bookkeeper and CPA is essential for a smooth tax filing process. At Ten Key, we pride ourselves on our ability to work seamlessly with tax planners and CPAs. By ensuring that your books are accurate and up-to-date, we facilitate an efficient tax filing process, minimizing the likelihood of errors and the need for time-consuming corrections.
Understanding ASC 842 Lease Accounting
This year, the ASC 842 lease accounting standard introduces a significant change in how leases are reported on financial statements. It requires businesses to recognize a right-of-use asset and corresponding lease liability for all leases exceeding 12 months. This new standard not only impacts your balance sheet but also affects key financial ratios such as your debt-to-equity ratio.
Impact of ASC 842 on Tax Planning
The implementation of ASC 842 will have a direct impact on your year-end tax planning. With the increase in both assets and liabilities on your balance sheet, it’s crucial to understand how this change affects your tax position. Our team at Ten Key is well-versed in these new standards and can guide you through the implications for your tax planning strategy.
Preparation Steps for ASC 842 Compliance
- Review All Lease Agreements: Begin by reviewing all your current lease agreements to identify those that will be impacted by the new standard.
- Classify Your Leases: Determine whether each lease is an operating or finance lease under the new guidelines.
- Adjust Your Financial Statements: Reflect these leases as right-of-use assets and liabilities on your balance sheet.
- Consult with Ten Key: Our experts can assist in accurately reporting these changes and advise on any potential tax implications.
- Finalizing Your Tax Preparation with Ten Key
As you approach the year-end, here are the steps we recommend to ensure a smooth tax preparation process:
- Schedule an Onsite Visit: Arrange for our team to review your financials in detail.
- Organize Your Financial Documents: Ensure all your financial records, including bank statements, invoices, and receipts, are in order.
- Discuss Your Business Goals: Share your business objectives for the upcoming year, as they can influence tax planning strategies.
- Review Tax-saving Strategies: Explore opportunities for tax deductions or deferrals that may be applicable to your business.
Setting the Stage for Success
Year-end tax planning, especially in the light of new standards like ASC 842, can be complex. However, with Ten Key by your side, you can navigate these challenges confidently. Our goal is to ensure that your financial reporting is not only compliant but also strategically aligned with your business objectives. Let’s work together to close this year on a strong note and lay a solid foundation for the year ahead.