The fastest, cheapest, and most accurate tax returns come from clean books handed over with the right supporting documents. The slowest come from a shoebox of statements and a vague memory of the year. This guide is a checklist for the first kind.
Step 1: Close the books
- 1Reconcile every bank, credit card, loan, and payment processor account through the last day of the year. See bank reconciliation problems if one will not balance.
- 2Clear uncategorized income and expense, suspense, and Ask My Accountant balances.
- 3Confirm that Opening Balance Equity is zero and that owner equity accounts are sensible.
- 4Review accounts receivable and payable for stale or incorrect items.
- 5Record year-end adjustments you know about, such as unpaid bills, depreciation, and inventory.
- 6Lock the period once it is final.
Step 2: Produce the core reports
- Profit and loss for the year, ideally by month and compared to the prior year.
- Balance sheet as of year-end.
- Trial balance and general ledger detail.
- Fixed asset list with purchase dates, costs, and disposals.
- Loan statements showing year-end balances and interest paid.
Step 3: Gather income documents
- Forms 1099-NEC, 1099-K, 1099-MISC, and any other information returns you received.
- Sales reports from point-of-sale systems, platforms, and marketplaces. Reconcile them to your recorded income.
- Sales tax filings and the sales tax payable balance, if applicable.
- Documentation of unusual income: grants, loans forgiven, insurance proceeds, asset sales.
Step 4: Gather expense and payroll documents
- Payroll summary reports, Forms 941 and 940, state payroll filings, and Forms W-2 and W-3.
- Contractor list with W-9s and payment totals, and the 1099s issued.
- Mileage logs for vehicles, and the vehicle's purchase or lease details.
- Home office measurements and costs, if applicable.
- Receipts supporting large or unusual deductions, such as travel, equipment, or professional fees.
- Health insurance, retirement plan, and owner benefit records.
Step 5: Entity-specific items
- Sole proprietor or single-member LLC: estimated tax payments made, home office details, and prior-year Schedule C.
- Partnership or multi-member LLC: operating agreement, member contributions and distributions, guaranteed payments, and capital account records.
- S corporation: owner W-2 wages, shareholder loans and distributions, stock basis records, and health insurance for more-than-2% shareholders.
- C corporation: dividend records, officer compensation, and prior-year tax return carryforwards.
- Nonprofit: grants, donor restrictions, and functional expense allocations. See Form 990 preparation cost.
Step 6: Note what changed during the year
A one-page summary of significant events saves hours: new owners, a sale or purchase of a business, new states you started selling in, a move, a new loan, equipment purchases, a change in accounting software, or anything that was unusual. Your accountant cannot see these from the numbers alone.
Step 7: Send it securely
- Use your accountant's secure portal rather than email attachments.
- Name files clearly and group them by category.
- Provide read-only or accountant-level access to your accounting software.
- Keep your own copy of everything you send.
What messy books cost you
When the accountant has to reconcile, categorize, and reconstruct, the work is billed or delayed, or both. If you are far behind, see bookkeeping cleanup services and what to do when your business books are months behind. For the pricing side, see business tax preparation cost.
Our tax preparation service works best from reconciled books, and our bookkeeping service can get you there. To schedule a consultation, tell us your entity type and what shape the books are in.
