Federal taxes, tax returns, income taxes. It’s all a headache. And if you own a small business, you may have anxiety when it comes to tax time. You’re not alone – tax filing can be scary. We’ve all been there: Digging through mountains of receipts, triple-checking invoices from half a year ago, losing sleep over whether you chose the right category for your expenses – taxes are no joke. Even if you think you’ve covered all your bases for tax preparation, you’ve lost valuable time looking for information that you could retrieve in a few clicks. And no, we’re not talking about tax software.
To help with your tax preparation, FreshBooks gives you access to all the data you need in 3 thorough Reports. The Profit & Loss Report, General Ledger Report, and Sales Tax Summary Report will save you time and spare you the stress of collecting and verifying everything you need to process your taxes with confidence this tax season before the tax deadline. These reports are like your personal tax professionals, as they’ll help make tax filing, tax returns, and meeting your tax deadline that much easier.
Your Profit & Loss Report (a.k.a. P&L) shows your total Income and Expenses in a specific period of time to give you a net profit or loss. This is an essential Report come tax time, as the form contains the information you’ll need to report on for your tax returns. Think of it as a snapshot of your business activity over the last year while being incredibly useful for your tax refund.
A P&L statement is important as it’s one of the three types of financial statements prepared by you or your accountant/accounting software to tell the financial story of your company.
The other two are the balance sheet and the cash flow statement. The purpose of the P&L statement is to show company revenues and expenditures over a specified period of time, usually over one fiscal year.
As a business owner, you and your accountant can use this information to understand the profitability of the company/business income, often combining this information with insights from the other two financial statements. These same data reports are the tax preparers to accompany you when tax filing your tax returns, tax refunds, or anything in between.
For example, you may want to calculate a company’s return on equity (ROE) by comparing its net income (as shown on the P&L) to its level of shareholder’s equity (as shown on the balance sheet).
Accessing your profit and loss report in FreshBooks is easy! To run your report:
Here’s what it looks like in FreshBooks:
The General Ledger Report gives you a detailed list of all the transactions you have in your account for a selected timeframe. It’s an invaluable tool that makes sure you’ve categorized everything correctly, and you’re not missing any potential tax deductions for tax time.
To run your General Ledger Report:
Here’s what it looks like in FreshBooks:
The Sales Tax Summary Report gives you a breakdown of the sales tax you’ve collected on revenue, along with how much you have paid on Expenses. If you are registered to collect Federal or Provincial sales tax, this will neatly summarize the information you need to file your return. This report would be helpful for Federal tax filing or Federal income tax.
To run your Sales Tax Summary Report:
Here’s what it looks like in FreshBooks:
The two other Reports worth looking at are the Cash Flow Report and the Invoice Details Report. The Cash Flow Report breaks down exactly how much cash you have on hand, as well as where the money came in from and went to. The Invoice Details Report provides a detailed summary of all the invoices you created and sent over a period of time to keep track of your fees.
Having all of this information at your fingertips will help make your tax filing more manageable. If you have interest in learning more about FreshBooks reports, contact our team of Support Rockstars, ready and able to help you out on your journey to become a tax expert.
This post was updated in October 2023.