Budget checklist

Year-End Tax Prep Checklist for Small Businesses

Does the thought of tax season cause your heart to race? Do you want to run and hide?

I get it. Tax season can be daunting and stressful for everyone.

But with the right plan in place, it can be more manageable. Using this Year-End Tax Prep Checklist can set up your small business for success this tax season.

  1. Update Transactions

Whether using accounting software or a spreadsheet, make sure all the transactions have been entered. Don’t forget to add any payment processing fees you may have. Read this for more information on payment processing fees.

  1. Reconcile Bank and Credit Card Statements

I tell my clients, “The statements are king! Everything needs to match.” Once all the transactions are entered, you need to reconcile, or compare, your accounting records to the actual bank and credit card statements. Any discrepancies need to be resolved. 

  1. Save Receipts and Documentation

The IRS requires supporting documentation for business transactions. Make sure you have receipts for all your expenses, as well as sales receipts, invoices, asset and liability information, and financial statements. Download my 6 Proven Steps to Organize Your Pile of Receipts guide to help you streamline the process.

  1. Review Financial Statements

Review your profit and loss (income) statement, balance sheet, and cash flow statement for accuracy. Compare the profit and loss statement month over month and year over year looking for trends and anything that seems unusual. This can help you find errors before it’s too late. Wondering what these financial statements actually mean? Look for my future blog post explaining each one.

  1. Review Outstanding Invoices and Bills

Review accounts receivable (customer invoices) and accounts payable (bills due) reports. Follow up with customers with outstanding invoices now. Verify you have sufficient cash flow or savings to cover any remaining payments and expenses for the year.

  1. Update Employee and Contractor Information

Remember the deadline to issue W2 and 1099 forms is January 31st. By taking the time now to update employee and contractor information, you will be better prepared to issue year-end documents before the deadline.

  1. Count Inventory

If your business involves physical inventory, schedule a time for your year-end inventory count. You need an accurate assessment of remaining inventory for tax purposes.

  1. Assess Business Status

Take some time now to record any significant changes in your business and evaluate your business structure and tax strategy. Did you make any investments or have changes in the ownership of your business? Are there any changes that could benefit you in the coming year? Be sure to consult a tax professional that can help guide you in these decisions.

  1. Gather Other Items

Not all the information you need to file your taxes comes from the accounting software. Remember to gather your mileage log, verification of home office expenses, paperwork for assets that will be included on the tax return, and any personal tax documents if you file as a sole proprietor on a Schedule C form. You will need to gather most of this information even if you are working with a bookkeeper or accountant throughout the year.

  1. Contact Tax Preparer

It is beneficial to work with a tax professional for many reasons. They stay up to date on any changes in tax regulations and can help you maximize your tax savings. I recommend meeting with your tax professional more than just at tax time. They are a valuable resource to any business.

Bonus tip: START EARLY! 

The earlier you begin, the less stressful it will be. The Year-End Tax Prep Checklist has several essential steps that can take time. 

If you’re feeling overwhelmed or want help preparing your small business for tax season, don’t hesitate to reach out. Schedule a free consultation and I will be happy to assist you. 

Rene Barlow

Hi, I’m Rene Barlow!

The person who helps you keep more of your money!

I help women-owned businesses gain clarity and control of their business finances… and feel more confident in their financial decisions, using an easy, step-by-step process to organize and track your business numbers… and you grow your bottom line!

Start with a free consultation