What Your Accountant Needs to File Your Small Business Taxes

Core financial records

Bring a reconciled profit and loss statement, balance sheet, general ledger and bank and credit card statements for every business account.

If you keep your books in software, export these reports for the full tax year:

• Profit and loss statement
• Balance sheet at year end
• General ledger or transaction detail
• Bank and credit card statements for all 12 months
• Merchant processor annual summaries

Reconcile every account first. An accountant who has to fix unreconciled books will charge for it. If you need to catch up, follow bank reconciliation and how to close the books. Not sure whether to hire a bookkeeper first? Read hiring bookkeeping help.

Income documents

Gather every record of money earned: invoices, 1099-NEC and 1099-K forms, sales reports and any other income statements.

Your accountant needs to see all income, not only the amounts that arrived by check. Collect:

• Sales reports from your POS or e-commerce platform
• Forms 1099-NEC, 1099-MISC and 1099-K you received
• Invoices issued and unpaid at year end (important if you use accrual accounting)
• Interest and other income statements

Compare the forms with your books. If a customer reported more than you recorded, find out why before filing. Your method matters too: see cash vs. accrual accounting.

Expense records and deductions

Provide categorized expenses with receipts for larger or unusual items, plus mileage, home office and vehicle information if you claim them.

Categorized expenses speed up the return. Typical items include rent, utilities, supplies, advertising, insurance, software, professional fees, interest and travel. Keep receipts and invoices. Special deductions need special records:

• Vehicle. A mileage log or actual expense records and the business-use percentage.
• Home office. Square footage of the office and of the home, and related expenses.
• Meals and travel. The date, amount, place and business purpose.
• Health insurance and retirement contributions. Statements showing amounts paid.

Rules change, so ask your accountant what applies this year. See small business tax deductions and business expense categories.

Payroll and contractor paperwork

If you had employees or contractors, provide payroll reports, W-2 and W-3 copies, quarterly payroll returns and Forms 1099 you issued.

Give your accountant:

1. Annual payroll summary and quarterly payroll tax returns
2. Copies of W-2s and the W-3. See what Form W-3 is.
3. Forms 1099-NEC you issued to contractors, and the W-9s collected
4. State unemployment filings and payment records
5. Records of owner compensation or draws

Worker classification is a common audit issue, so make sure the contractor versus employee line is documented. Compare roles in types of employment.

Assets, loans and ownership

Bring purchase records for equipment and vehicles, loan statements showing interest paid, and any changes in ownership or business structure.

• Asset purchases and sales. Invoices, dates placed in service and prices, for depreciation. See depreciation.
• Loans and financing. Year-end statements, interest paid and amounts borrowed. Financing paperwork helps your accountant treat the transactions correctly.
• Ownership. Partners, shareholders, percentages and any changes during the year.
• Entity documents. Your EIN letter and formation documents. See business tax ID numbers.
• Prior returns. At least last year's federal and state returns.

Tell your accountant about anything unusual: a new location, a sold asset, forgiven debt or a move to another state.

Estimated taxes, notices and a year-round routine

Share proof of estimated tax payments and any IRS or state notices. The best preparation is a monthly routine, not a January scramble.

Bring confirmation of quarterly estimated payments made to the IRS and your state, along with any notices received. Missing payment records can lead to wrong balances. See tips for filing quarterly taxes.

A monthly habit that pays off:

1. Categorize transactions weekly.
2. Reconcile bank accounts monthly.
3. Save receipts digitally as they happen.
4. Review the profit and loss with your accountant each quarter.

Choosing the right preparer matters, too. See how to hire a tax preparer and how much a CPA costs. For the overall process, read the tax preparation guide.

When the tax bill is larger than the cash on hand

Plan for the bill before filing. If cash is short, compare payment plans and financing costs carefully before choosing.

A strong year can still leave you short at filing time, especially if profit went into inventory or equipment. Options include an IRS payment arrangement, using reserves, or short-term financing. Each has a cost. Illustrative example: if a $20,000 tax bill would cause penalties and interest of a few percent a year, compare that against the total cost of a short-term product. Read using a business loan to pay taxes first, and talk to your accountant.

ROI Funder considers 500+ FICO, 6+ months in business and $20,000+ monthly revenue, with working capital and lines of credit among the products, and shows the full cost before you sign.