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Tax checklist for small businesses

From deductions to expenses, there’s a lot to remember when filing taxes. Small businesses often don’t have a dedicated staff to tick all the boxes, so organization is key. Whether you’re filing your first return or simply wish to make sure that you’re not missing anything, follow this small business tax preparation checklist.

Tax preparation checklist

You can adapt this tax checklist to suit your business, but in general you’ll need to meet the following requirements.

1. Gather the right forms.

To get started, you’ll need to create a tax document checklist. The forms needed will depend upon your business type and structure.

  • Sole proprietorship – Form 1040 and Schedule C or 1099-MISC

  • Partnership – Form 1065 and Schedule K-1

  • S Corporation – Form 1120S

  • C Corporation – Form 1120

2. Pull together your financial records.

In addition to tax forms, you’ll also need to include your own business records as part of the tax document checklist. Some of the most common documents include things like:

  • Balance sheet

  • Income statement

  • Cash flow statement

  • Payroll documents

  • Bank statements

  • Asset purchase receipts

  • Accounting records

  • Depreciation schedules

  • Last year’s tax return

Pulling all of this together ahead of time ensures your tax accountant has everything needed for an accurate return.

3. Schedule a meeting with your accountant. 

After pulling together paperwork from the tax document checklist above, you’re ready to sit down and meet with your bookkeeper. They can answer any questions you might have about this small business tax preparation checklist. It’s important to have a preliminary chat about what to expect with this year’s return. Don’t leave it until the day before your return is due.

4. Uncover missing receipts.

Even if you’ve been using accounting software to diligently track all of your expenses, it’s likely a few receipts have slipped through the cracks. Now’s your chance to sift through your accounts to track down additional expenses. Perhaps you used your personal Amazon account to buy business supplies or used a different credit card than usual. Don’t miss out on those deductions.

5. Pull together all business expenses.

Along these same lines, the next step is to itemize all your deductions. You can keep the following tax deduction checklist in mind:

  • Assets including computers, vehicles, and equipment

  • Office supplies

  • Office space (including home offices)

  • Utilities

  • Health insurance premiums

  • Transportation costs

  • Meal expenses

It’s worth presenting all business expenses to your accountant to see if they qualify as a deduction.

6. Update your mileage.

If you use any vehicle for business purposes, this mileage would be included on the tax deduction checklist above. However, be sure to track it accurately using a smartphone app. Print out a report of your mileage as proof, as the IRS requires a physical log.

7. Deduct estimated income tax payments.

Most small businesses pay estimated income tax payments on a rolling basis throughout the year. For instance, you might make these estimated payments at the end of each financial quarter to stay on top of your tax liability. On top of this, if your business employs workers you’ll also need to deposit payroll taxes. You can deduct what you’ve already paid from your final tax bill.

8. Compile 1099 forms.

If your business works with contractors, 1099 forms should be part of your tax preparation checklist. These are required for any workers you’ve paid that aren’t regular employees. Be sure to send out 1099-NEC forms with the accurate amount of money paid. The recipient of the 1099 form can then include this information on their own tax return. Another thing to keep in mind is that the deadline for 1099 form submission is earlier than the rest of your business tax return. Normally, it must be sent out by January 31 at the latest to give non-employees ample time to file their own taxes. This will prevent backup withholding charges and other penalties.

9. Note any changes to the business.

Has a partner left the business? Have you started to offer stock options to employees? As with a personal tax return, you should include any changes in circumstances as part of your business return. This is particularly important if these changes impact your business equity.

10. Request an extension ahead of time.

If you don’t think you’ll be able to make the usual deadline, you can request an IRS filing extension. This is easy to do online, or you can ask your tax preparer to make the request on your behalf. Keep in mind that you’re still responsible for making payments by the original deadline, or you’ll be on the hook for penalties.

While no business owner looks forward to tax season, following this small business tax checklist can help you keep everything in order. Accounting software can help, as can an organized filing system.

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