Overview
In order to perform year-end adjustments to your books, Heard will request that you provide specific documents each January. This document will walk you through each type of document we request, why it's needed, where you can find it, and how to share it with Heard.
- Assets >$2,500 Receipts
- Contractor Payment Report
- 2023 Income Reports
- Form W-3
- Payment Processor Report
Assets >$2,500 Receipts
What is a fixed asset?
Fixed assets are tangible, long-term property or items that are purchased by your business. They typically are not consumed or easily converted into cash, and the benefit of the fixed asset extends beyond the initial purchase, providing value beyond the current accounting year. Because of this, fixed assets are treated differently from other expenses, and the IRS requires businesses to capitalize the purchase of fixed assets if the cost of the asset exceeds $2,500.
If your business has purchased a fixed asset that is over the $2,500 fixed asset threshold, we will require a receipt of the transaction.
Why is this done?
During the tax season, your tax preparer will use this receipt to help calculate the associated depreciation expense, which lowers your taxable business income.
Depreciation is a method where the cost of fixed assets or tangible assets are allocated over the years in which the assets helped generate revenues or sales or their useful life. By creating a depreciation expense, the business reduces the number of earnings on which taxes are based, thus decreasing the tax owed. Depending on your type of filing, this will appear on your Schedule C (sole prop) or K-1 (S-Corp).
Where can I find these documents?
You'll need to provide a receipt for the purchase of each fixed asset costing more than $2,500. The receipt should include the date of the purchase, the amount, and a description of what was purchased.
How can I upload to Heard?
Follow the steps in How can I upload these documents to Heard? and set the document category to 2023 Assets >$2,500 Receipt upload via Documents. You'll need to repeat this for each asset you purchased that cost more than $2,500.
Contractor Payment Reports
Heard will complete a reconciliation of your books to ensure that all contractor payments are reflected on your Profit and Loss Statement. In order to do so, Heard will request your Contractor Reports.
What is a Contractor Report?
The Contractor Report totals all payments made to your 1099 independent contractors.
Why are these documents needed?
Payments made to 1099 contractors are a deduction for your business. So, we want to ensure that your Profit and Loss Statement encompasses all contractor payments.
Please note: these reports are only required if you pay your contractor via a payroll provider. If you pay them via Paypal, Venmo, Zelle, etc, please disregard.
Where can I find these documents?
You will need to login to your payroll provider account. Typically there is a tab for “Reports” documents. This is likely where you will find the Contractor Payment Report.
If you are unable to find the correct report, please contact your payroll provider.
Please note that this is an automated process for the Gusto users who gave us admin access, and you do not need to upload this document in that case.
How can I upload to Heard?
Follow the steps in How can I upload these documents to Heard? and set the document category to 2023 Contractor Payments Report if uploading via Documents.
2023 Income Reports
Why are these documents needed?
If you earn income in December and the credit card processor deposits the income into your bank account in January, it would be reported in the wrong tax year without adjustment.
It's important for us to reflect the correct income amounts in the right tax year. If your EHR/payment processor issues a 1099 tax form to the IRS listing this income in December, we need to ensure that this therapy income is also accounted for in December so that your books match what the IRS expects.
Where can I find these documents?
The report you generate for the Merchant Fee Report will generally also provide the necessary information for adjusting your income. See Merchant Fees Report > Where can I find these documents for those steps.
How can I upload to Heard?
Follow the steps in How can I upload these documents to Heard? and set the document category to 2023 Payment Processor Report (Income or Merchant) if uploading via Documents.
Form W-3
Why are these documents needed?
Heard requires payroll users to upload their W-3, which summarizes the business’s total salary payments and withholding amounts.
Where can I find these documents?
You will need to log in to your payroll provider account. Typically, there is a tab for “Tax” documents. This is where you will find the W-3.
If you are unable to find the W-3 tax form, please contact your payroll provider.
For Heard Payroll customers this is an automated process for Gusto users who have given us admin access.
How can I upload to Heard?
Follow the steps in How can I upload these documents to Heard? and set the document category to 2023 Form W-3 if uploading via Documents.
Merchant Fees Report
Why are these documents needed?
If you accept payment via a credit card payment processor (e.g., Stripe, Square, etc), the credit card payment processor automatically deducts their fees from your therapy income. This means that if you made $100 with $5 in fees, $95 of therapy income is automatically deposited into your bank account. The $95 in revenue is recorded in your books since we have a journal entry for the deposit, but the $5 in fees you paid aren't automatically recorded as an expense since they're deducted before the revenue hits your books.
In order to accurately reflect the fees you've paid in the year, we will need a report that shows the amount of processing fees your credit card payment processor withheld during 2023.
We will adjust your therapy income and credit card merchant fees by the same amount. The net effect is $0, but your books more accurately reflect the therapy income and expenses you paid in 2023.
Where can I find these documents?
These documents should become available in early January for the preceding year. We've included links to documentation for common payment processors our customers use, but you'll need to provide similar documentation if you use another payment processor.
-
Stripe: Balance report and Payout reconciliation report
- Please note that both the Balance report and the Payout reconciliation report are needed
- Square: Sales Summary report
- Simple Practice: Tax Report for the preceding tax year
If you use another payment processor, ensure that the documentation you provide includes:
- The amount of credit card processing fees you paid in the tax year
- If you earned income in the last week of December when it was deposited into your bank account
Important: Please review these reports before you share them with us. Depending on how your transactions are recorded, they might include your client's names. To remain HIPAA compliant, please review the reports and delete client information before sharing.
How can I upload to Heard?
Follow the steps in How can I upload these documents to Heard? and set the document category to 2023 Merchant Fees Report if uploading via Documents.
How can I upload these documents to Heard?
After you've downloaded the reports to your computer from the appropriate source, you'll need to upload a copy to Heard. There are two ways you can do so.
From your Heard dashboard "To Do" items
If you click on the individual "To Do" item found on your dashboard, you'll be taken to a special document upload option, which will walk you through what to do. If you upload your documents this way for each "To Do" item, they'll be automatically tagged appropriately.
From the Documents section within Heard
- Log into Heard
- Click Your Practice in the left sidebar and then Documents
- Click the Bookkeeping tab
- Click Upload Documents to bring up the document upload form
- Click Select Documents to browse for the document you need to upload on your local computer
- Click into the Select Document Category dropdown and select the appropriate document type
- Click Upload to finish uploading the document to Heard