In a world of low yields and high valuations in the market, trying to get a decent return on your investments can be tough. To best serve our present and future clients, a bookkeeping plan with this in mind is a step from traditional offerings because it comes with comprehensive planning based on your goals. An important step to this plan is deep dive tax planning. While some have simple suggestions for moving your money from here to there, a comprehensive plan is necessary.
1. The Basics of a Good Bookkeeping Plan
The goal of any good plan should be to know your assets, liabilities, plans for each of them, and to keep all parties from making a costly mistake. Info a plan should definitely contain includes:
- Past client tax returns that go back at least five years.
- Any IRA or IRA Roth contributions that have been made or are planned to be made.
- Any IRA distributions that have or will be made.
- Any other 401(k) or similar pension and retirement plan contributions.
- Form 8606 tracking in order to track nondeductible contributions to an IRA or similar.
- And any charitable contributions that may change depending on this and other information.
2. The Documents for Your Bookkeeping Plan
It can be difficult to make a successful plan for your finances without knowing an exact dollar amount. This is only achieved through a variety of documents from sources such as a W-2, 1099 forms, bank statements, credit card statements, and various other financial statements. A decent estimate can be just as dangerous as a completely wrong number.
Financial and tax reviews should have started around the middle of the summer to check for variances and errors in the data. One of the most common mistakes are deductions that are completely missed. Just this one error caught by your bookkeeping plan can pay for it and much more. Another mistake we see a lot are deductions that have been failed to be updated through Form 8606 tracking. While catching this error doesn’t make you any money, it saves you a ton by coming clean to the IRS rather than having them come after you. The penalties alone can be more than the bookkeeping plan, not to mention the attorney fees.
3. Who Can Benefit from a Bookkeeping Plan?
Everyone from small to large businesses can get many benefits from this sort of smart planning, along with families with assets to plan. It can help all of them minimize their tax liability. The plan can also help them be realistic about what they will pay at the end of the tax year or get back as a refund.
This type of plan is especially useful for clients with large deductions or large losses. This includes those who lost money in business sales in the last year or lost money from the sale or rental of a property. If the numbers of the loss are large enough, they may have $0 in taxable income. This may good in not having to pay certain income taxes but can be damaging when taking a distribution from an IRA or Roth conversion.
Conclusion on Bookkeeping Plans
This intensive bookkeeping plan can sound expensive and come with a lot of work. The right bookkeeper can make it less painful and provide a number of financial benefits that will make it all worthwhile.
Houston Bookkeeping Plans for you
And if you are a business or individual who is in need of an expert bookkeeping plan for your family or business, please contact me.