Tax-ready books for San Diego County businesses

What tax-ready means to a CPA

Your CPA does not want a stack of receipts or a profit and loss that changes each time they ask a question. They want a closed year: a balance sheet that ties to statements, an income statement coded to accounts that map to the return, and answers to the usual questions in writing.

When books arrive in that shape, the CPA spends time on tax planning and the return itself. When they do not, the first weeks of the engagement go to bookkeeping at tax season rates.

The year-end checklist

• Every bank, card and loan account reconciled through December 31
• Owner draws, contributions and personal charges recorded on the balance sheet
• Loan balances that agree with each lender statement, with interest recorded apart
• Equipment and vehicle purchases listed with dates and amounts for the depreciation schedule
• Sales tax collected tied to the returns filed with the CDTFA
• Payroll expense and liabilities matching your payroll provider's year-end reports
• Contractor payments totaled by vendor, with W-9s on file
• Accounts receivable and payable cleaned of old items that will never be paid

1099s start in January

If you paid an independent contractor during the year, your CPA or payroll provider will likely ask for contractor totals in early January. Form 1099-NEC reports nonemployee compensation, and the IRS instructions say it must go to the payee and the IRS by January 31.

That is a tight window if vendor records are messy. Tax-ready books keep each contractor set up once, with card payments marked so they can be left out where your CPA says they should be. Then the totals come straight from a report.

Which payments need a 1099 depends on the payee and how you paid. Your CPA makes that call.

How the year is closed

1. Finish December The last month is coded and reconciled like any other month, using the December statements.
2. Review the balance sheet Each balance sheet account is checked against an outside document: a statement, a schedule or a payroll report.
3. Answer the CPA's list The bookkeeper works through your CPA's request list and attaches the reports and schedules.
4. Lock the year A closing date is set so the year your CPA files from cannot change by accident.
5. Book the CPA's adjustments If your CPA posts year-end adjustments, they are recorded so next year starts from the filed numbers.

San Diego details at year end

If you operate inside the City of San Diego, the city requires a Business Tax Certificate, including for home-based and self-employed businesses. Each city has its own requirement, so a business working from Escondido or El Cajon checks with that city instead. Your books should show those fees, and your CPA may ask for them.

Short-term rental owners in the City of San Diego file monthly Transient Occupancy Tax returns. At year end, the rent reported on those twelve returns should agree with the rental income in your books. A difference is easier to explain in January than in an audit.

If the year is not done yet

If months are missing, start with catch-up bookkeeping. If the books exist but do not tie to the bank, start with a bookkeeping cleanup. If the CPA deadline is close, see emergency bookkeeping, and ask your CPA about an extension.

Where we work

We keep books for businesses across the City of San Diego, North County, the South Bay and East County.

• Carlsbad
• Chula Vista
• Downtown San Diego
• El Cajon
• Encinitas
• Escondido
• La Mesa
• Oceanside
• San Diego
• San Marcos
• Vista

Questions