Small Business Tax Time Checklist

1. Know which tax forms you’ll need to fill out.

You can’t file your taxes correctly without the right form or forms, so identifying the proper tax documents you’ll need is one of the first steps that any small business owner should take.

The type of form you require will depend on the nature of the business you run.

  • If you’re a sole proprietor, attach a Schedule C Form to your personal income tax return, or use a 1099-MISC

  • If you’re a C-corporation, use Form 1120

  • If you have S-corporation status, use Form 1120S

  • If you’re in a partnership, file Form 1065 as an informational return and submit your share of the business’s expenses, income, and losses on Schedule K-1

Keep in mind, your tax liability can vary widely based on what type of business entity you have. Your accountant or tax preparer will be able to explain the impact of your business type on your tax burden.

2. Meet with your bookkeeper.

Whether you outsource your bookkeeping or keep it in-house, your bookkeeper is a valuable resource when it comes to small business tax preparation. That’s why meeting with your bookkeeper tops our small business tax preparation checklist.

Many bookkeepers do not prepare tax returns, but an experienced bookkeeper knows many of the answers to your tax preparer’s questions—before your tax preparer even asks them. Schedule some time to review the previous year’s books with your bookkeeper. Make sure any questions they have for you have been resolved. Ensure all your accounts are fully reconciled. Review the balance sheet for the proper recognition of new asset purchases. Being comfortable with your books before your tax appointment will make the process go smoother for both you and your tax preparer.

3. Update your mileage log.

If you use your personal vehicle for business, deducting the standard mileage rate on your tax return is usually more beneficial than deducting your actual vehicle expenses for the year. The trick, of course, is you have to track your mileage in order to take the correct deduction. Fortunately, the days of keeping a paper log are behind us, and there are a number of mileage tracking apps you can install on your smartphone to make tracking mileage painless.

Before scheduling your tax appointment, make sure your mileage log app has been updated and all trips have been properly classified as either business or personal. Print out the report and take it to your tax preparer, along with your vehicle mileage at the beginning and the end of the tax year. Avoid the temptation to “estimate” your mileage deduction—the IRS requires you to keep a log, and failure to do so can lead to your deduction being disallowed in the event you are ever audited.

4. Gather your financial records.

The third tip on our small business tax preparation checklist is to gather your financial records.

Here’s a list of some of the most common documents that small business owners should track down before filing:

  • Income statement

  • Balance sheet

  • Bank and credit card statements

  • Payroll documents

  • Last year’s business tax return

  • Partnership agreements

  • Accounting documents

  • Asset purchase details

  • Depreciation schedules

By making sure all this information is on-hand before beginning, business owners can make the tax preparation process less time-consuming. Ideally, you should be using business accounting software to generate most of these financial records.