Resources

Ongoing advisory services in Mesa, AZ offer monthly strategy calls, CFO Lite support, growth guidance, and software recommendations to strengthen your business operations.

If you’re getting ready to send your books to your tax preparer and feeling unsure whether everything is “done,” you’re not alone. January is when many small business owners realize their numbers don’t quite line up — and that can delay tax filing or create costly mistakes. Before your business tax return can be filed, certain accounts must be reconciled. Reconciliation simply means confirming that what’s in your accounting system matches reality. If these areas aren’t reconciled, your tax return may be inaccurate, delayed, or flagged for questions. Here’s what needs to be reconciled before tax prep begins — and why it matters. 1. Bank Accounts Every business bank account should be reconciled through December 31 . This means: • All deposits are recorded • All expenses and transfers are categorized correctly • The ending balance in your books matches the bank statement Why it matters: Your bank account activity drives almost every number on your tax return. If it’s not reconciled, income may be overstated or understated, expenses may be missing, and your cash balance will be unreliable. This is usually the first thing a tax preparer checks . 2. Credit Cards and Loans All business credit cards and loan accounts need to be reconciled, not just entered. This includes: • Matching statements to recorded transactions • Separating principal vs. interest on loans • Confirming balances match lender statements Why it matters: Unreconciled credit cards often mean: • Duplicate expenses • Missing expenses • Incorrect balances that throw off your balance sheet Loan balances affect your liabilities and interest deductions — both are critical for accurate tax reporting. 3. Income Accounts Your income should reflect what you actually earned, not just what hit the bank. This includes: • Matching deposits to invoices (if applicable) • Confirming income is recorded in the correct year • Reviewing owner contributions vs. business income Why it matters: Misclassified income can result in: • Overpaying taxes • Underreporting revenue • IRS notices later asking for clarification This step is especially important for service-based businesses and contractors. 4. Payroll & Contractor Payments If you ran payroll or paid contractors, these areas must be reviewed and reconciled: • Payroll totals match payroll reports • Payroll taxes were recorded correctly • Contractor payments match 1099 totals Why it matters: Payroll errors don’t just affect your tax return — they can create compliance issues with the IRS and state agencies. Reconciling now helps prevent amended filings later. 5. Balance Sheet Accounts Your balance sheet is not “just for accountants.” It tells the story of your business at year-end. Accounts that should be reviewed: • Accounts receivable • Accounts payable • Owner contributions and distributions • Retained earnings or equity balances Why it matters: If your balance sheet doesn’t make sense, your tax return won’t either. Many tax questions come directly from unresolved balance sheet issues. What Happens If These Aren’t Reconciled? If reconciliations aren’t completed before tax prep, common outcomes include: • Delayed tax filing • Higher tax prep costs • Incorrect tax returns • Amendments later • Stress (for everyone involved) Most tax preparers will pause or push back filing until books are cleaned up — because filing with bad data creates bigger problems down the road. Final Thoughts Think of reconciliation as closing the books on the year. It’s the bridge between bookkeeping and tax preparation, and it’s one of the most important steps you can take to protect your business. If you’re unsure whether your accounts are fully reconciled, or you know your books need cleanup before taxes, it’s much easier (and cheaper) to fix it now than after filing. Need Help Getting Your Books Tax-Ready? If you need help reconciling accounts, catching up your bookkeeping, or making sure your books are ready for tax prep, I offer bookkeeping cleanup and tax-ready reviews for small business owners. Reach out to schedule a review — and let’s get your books cleaned up before tax season is in full swing. Click here to schedule your free consultation, or reach out anytime for support. 520-668-6537 info@bookswithprecision.com www.bookswithprecision.com

Business startup and entity support services in Provo, UT guide LLC and S-Corp formation, EIN setup, registered agent services, and compliance so you launch correctly.

If you own a business, there is one report you’ll hear about constantly – but may not fully understand: the Profit and Loss Statement, often called a P&L. This report isn’t just for accountants or tax filings. It’s one of the most important tools you have for understanding how your business is performing and making informed decisions moving forward. Here’s what the Profit & Loss statement is, how to read it, and what it can tell you about your business. 1. What is a Profit & Loss Statement? The Profit & Loss statement shows: Income (What your business earned) Expenses (What your business spent) Net profit or loss (What’s left over) It covers a specific time and is a valuable tool that helps answer one simple – but critical – question: Is my business actually making money? 2. What Your Income Section Can Tell You The income portion of your P&L shows how much revenue your business brought in during the period- but this is also where many business owners misunderstand what the numbers actually mean. A common misconception is assuming total revenue equals what the business is “making.” In reality, revenue only shows how much money came in before expenses are paid. By reviewing the income section, you can see: • Whether revenue is consistent or fluctuating • If growth is happening – or stalling. • How this period compares to prior months or years This helps you understand trends, not just totals. Key takeaway : Revenue tells you how busy you are – but not how profitable you are. 3. What Your Expenses Reveal About Your Business Expenses are often where the biggest insights – and problems – live. Your P&L can reveal: • Spending that’s increased over time • Categories that may be misclassified • Missing expenses or deductions • Personal expenses mixed into business costs If expenses are not accurate or organized, the profit number at the bottom won’t be dependable either. Key takeaway : Clean expense categories lead to clearer decisions and smoother tax preparation. 4. Why Profit Doesn’t Always Mean Cash One of the most common misunderstandings is assuming profit equals cash in the bank. Your P&L does not show: • Loan principal payments. • Owner draws or distributions. • Timing of customer payments This is why a business can appear profitable on paper but still feel cash tight. Key takeaway : Profit and cash flow are related – but not the same. 5. What A P&L Can Tell You About Owner Pay How you pay yourself matters more than many business owners realize. A P&L can highlight: • Whether owner compensation is consistent • If payroll or draws align with profitability • Potential issues that affect taxes or compliance This is especially important for business owners who wear many hats and don’t review reports regularly. Why an Accurate P&L Matters for Taxes and Planning Your Profit & Loss statement is the foundation for: Tax preparation Year-end adjustments Financial planning Setting realistic goals for the next year If the P&L is inaccurate or outdated, decisions based on it will be inaccurate too. Key takeaway : a clean P&L saves time, reduces stress, and prevents surprises. A Profit & Loss statement isn’t just a report your accountant asks for – it’s a roadmap for your business. Understanding what it shows (and what it doesn’t) gives you clarity, confidence, and control over your finances – whether you’re preparing taxes, planning for growth, or simply trying to understand where your money is going. Need Help Reviewing Your P&L? If you’re unsure whether your Profit & Loss statement is accurate – or you’d like help understanding what it means for your business – professional review can make a big difference. Reach out anytime to discuss bookkeeping cleanup, financial reviews, or tax preparation support. Click here to schedule your free consultation. https://engage.townsquareinteractive.com/site/TIPRECIS263/online-scheduling or reach out anytime for support. 520-668-6537 info@bookswithprecision.com www.bookswithprecision.com

Let’s be real, nobody likes keeping track of their receipts. And if you do… well, you’re definitely in the minority. But whether we like it or not, receipts matter more than most business owners realize. There are many reasons to track your receipts, but here are the top 3. IRS Audit Protection If you get audited and don’t have receipts, the IRS can wipe out your deductions. No receipt = no proof. No proof = disallowed deductions. Disallowed deduction = higher taxes, penalties and interest. It really is that simple. Accurate Bookkeeping & Clean Tax Returns Bookkeeping is only as accurate as your documentation. A bank statement only shows the amount – not what you bought or why. Receipts keep your books clean, your categories correct, and your tax return accurate. Guesswork leads to mistakes, and mistakes cost money. Support for Specific IRS-Limited Deductions These categories have strict substantiation rules. If you don’t have detailed receipts, the IRS automatically disallows these deductions – no estimates allowed. Meals- must show who you met and the business purpose. Travel – dates, locations, and receipts. Vehicle – mileage logs or actual expense receipts These deductions add up to thousands each year, and they’re the first one’s auditors look at. Keeping your receipts may feel like a hassle, but the protection and savings are worth it. A few seconds of record-keeping now can save you hours of stress – and potentially thousands of dollars – later. If you’d like help reviewing any of these items, now is the perfect time to reach out. Click here to schedule your free consultation. https://engage.townsquareinteractive.com/site/TIPRECIS263/online-scheduling or reach out anytime for support. 520-668-6537 info@bookswithprecision.com www.bookswithprecision.com

Tax preparation services in Marana, AZ organize documents, prepare records, and identify deduction strategies to help individuals and businesses file accurately.

Payroll services in San Tan Valley, AZ handle tax withholding, quarterly reporting, W2 and 1099 preparation, and compliance so you can focus on your business.