Successful recordkeeping begins with setting up your system correctly from the start which allows the system to come up with accurate totals. This is the same whether you need to pay sales tax or prepare 1099s or prepare the Schedule C small businesses are required to submit with their tax returns.
Almost all states require sales tax. Here in Michigan we collect 6% on sales to Michigan customers. At the beginning of the year you should have set up a sales tax rate according to your state, a taxable sales column and non-taxable columns for example: Resale, Interstate Commerce and Exempt Services to name just a few. All of this can be set up in the Deposits area of the January file so the Big E-Z System will accumulate the totals you can later put on your state sales tax return. Here's a video that shows where Sales Taxes are collected in the Big E-Z System.
It is February and your 1099s should have already gone out to your independent contractors by January 31st. But your 1096 form, which acts as a cover sheet or an annual summary with totals of all your 1099s is due to the government by Feb. 29th this year. To track payments to independent contractors, we suggest you set up a separate Subcategory for each 1099 recipient and let the Big E-Z System accumulate these totals for you. At the beginning of the year, and as you add more independent contractors, be sure to get their address and social security number and enter this information in the Subcategories area on the Checks worksheet of the January file. It's a lot easier to get this information now than in January 2013. Here's a video that shows you how to do this.
Finally, there is the Schedule C small business owners or their tax professional need to complete as part of their tax return. Click on the Schedule C and you will see a list of expense categories. If you chose our Business Category Group last year, you will have already been tracking most of the correct categories for your tax return. If you have reconciled each month throughout the year, you can rest assured that your Deposits and Checks are correct.
Now for the tricky part: did you charge or pay cash for any expenses? If so, did you record those in the Cash & Charges area of the Big E-Z System? This is precisely where the 2012 Big E-Z System shines! The Account Balance Tracker in 2012 fully automates and allows you to reconcile ALL OF YOUR ACCOUNTS not just your checking account. So all your savings interest, loans and fees, credit card transactions, and online sales etc. can be accounted for. It will allow you to quickly see if you missed recording any expenses.
Once all your data has been entered it is a matter of printing the Year-To-Date Income Statement and transferring those totals to your Schedule C---and that's it.
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