How to Properly Prepare for Tax Season with Caitlynn Eldridge

How to Properly Prepare for Tax Season with Caitlynn Eldridge

Welcome to episode 32 of The Determined Mom Show. I am your host, Amanda Tento. Thank you so much for listening and reading. I have a very special guest. She is Caitlynn Eldridge, a CPA and Eldridge CPA, LLC founder. So if you are looking for any accounting help or tax help, she is your go-to person, and she is here today to talk to us about how to properly prepare for tax season. So welcome, Caitlynn, and tell us about yourself. 

“Hey, thanks for having me. I appreciate it. So I am a mom of three beautiful girls. I have a husband who’s in the military, and like you said, I’m a CPA. So I left college and graduated. What is it now? Almost ten years ago. I worked for a big four accounting firm and spent the next seven to eight years working for other companies. At one point, I thought we were moving to England.

I resigned and was excited to pack our family up and head overseas. However, my husband came home and said, we’re moving to Mississippi instead, and since I had already resigned anyways, I talked to a friend, and she suggested I start my own business, and off I ran with it.”

How many years is the actual CPA training? 

“So it depends on your state. I was living and working in Nebraska at the time.  To receive my CPA, I had to pass the exam and have two years of work experience under a certified public accountant. Some states are one year. So you can usually get a reciprocal license from a client. So for a military spouse, it’s a great career because they don’t have to retest in different States. It’s typically 150 credit hours, two years experience, and then the test.”

Okay. Well, that’s interesting. That’s very cool. I’ve always wondered, so the nonprofit that I worked in, I worked like extremely closely with the whole CPA firm. I was responsible for helping them with the audit, and I remember working with all of them, but it seems like an attorney or this big looming title. So I always wondered what exactly is involved in getting that title. So thank you for clearing that up.

I am super excited to get started talking about the topic today. It is tax season, and small business owners are starting to feel the itch to prepare their tax papers. I did well in July 2020 and fell off, like keeping everything in order.  I hope you have some great tips for us today on what we need to do. 

“Businesses should always be prepared for tax season and find the time to get all this done and get it done quickly, so you can get it to your CPA and get it off your plate. Before-tax season, I see the most procrastination just because people don’t want to do it, and so that’s when they come in April, and all of a sudden, it becomes a fire drill. So we’re going to prevent the fire drills, and you’re going to get this done in a couple of weeks and be ready to move on with the new year.

For starters, If you drive at all for your business and work from home, I want you to check your odometer on the car you drive the most, and I want you to write that number down. It would be best if you had that for the last year and the last year. So you can grab that odometer reading and all your mileage for the year.

You’re going to want that in Excel would be great paper and pen works, but what you’re going to want to have, and this is for your records, is where you went, why you went there, and how far you went. So once you have that, go ahead and tally up the mileage piece, and that’s the only piece your CPA needs. The best thing is now you have the proof if they ask for it, or if you have to come up with that answer later, it will still be somewhat fresh if you forgot to do it during the year. So do it now while you can still recreate those meetings, the best you can.” 

I have a question about that. I rarely leave my house, which is bad, but the only places I go are occasional client meetings. I only have a few local clients, but I might meet them at a coffee shop or want to go to their office. It’s about 20 miles away, and the other place I go is the credit union. Are those two things considered business use? 

“Yeah. So the client meeting is for sure, but the bank could be argued. Another place to think about would be the post office. So if you sell something and you’re running to the post office to ship it, then the mileage to and from that post office counts as ‘to and from client offices,’ or if you’re meeting a client at a coffee shop or a restaurant, the mileage to and from those will count as well. So you want to take a look at that. 

Your receipts are the next one. So hopefully, you’ve been keeping those all year. You’ve either stuffed them in an envelope somewhere or scanned them in and saved them on your desktop. Another popular one is people will take pictures of it on their phones and create a folder in your albums, and it just says ‘receipts,’ and you can keep them all that way.

So if you’ve got them in five different places around your house, this is a great time to put them all in one place and label them. You should be good to go again. This is for documents you need to retain for your purposes. Not necessarily that you need to drop off at your CPAs.”

How do I organize the thousands of receipts for things I have purchased in my email? Do you have a good system for that? 

“I think a folder is probably your best bet, and then from there, the very organized part of me would subfolder it. So I would have receipts for marketing in one file and receipts for equipment in another.

So you’re keeping that in case the IRS audits you and wants proof. As I said earlier, your CPA only needs them if you’ve given them a tallied answer. So that’s what you’re keeping it for if an IRS agent shows up in the next seven years and says, ‘Hey, I want some proof of that. A hundred-dollar dinner that you said was a client. So can you provide me that receipt?’ As you’re tallying those up, you will want a ‘Meals and Entertainment’ expense highlighted on the Excel or the printout from your QuickBooks that you’re providing your CPA.”

I appreciate you coming on and sharing with us. Of this precious information, I took detailed notes, and I’m going to have all of those notes in the show notes as well. So then that way, people can get those tips pretty quickly and easily and check you out, so thanks so much.