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Small Business Tax Preparation Checklist

Posted by Paul Daniels on Wednesday, February 13, 2019

Updated on Thursday, November 16, 2023

Our small business tax preparation checklist can help you tackle tax season without breaking a sweat.

Professional reviewing a tax preparation checklist

Everything You Need To Know About Tax Planning As a Small Business Owner

Preparing for tax season can be daunting and a bit overwhelming – especially if you’re filing taxes for the first time. That is why we’ve created a small business tax preparation checklist to make it easier for you and your company come tax season.

1. Reconcile Bank Accounts

Before preparing a tax return, it is important to reconcile your business bank accounts. This helps you, your tax professional or tax preparation service ensure that all expenses and revenues have been recognized.

2. Update Your Mileage Log

If you use a personal vehicle for business, update your mileage log prior to meeting with your tax advisor or preparer. They will need a copy of your mileage log and what your vehicle mileage was at the beginning and end of the calendar year.

3. Tie Loan Accounts to Actual Balances

At year end, review your loan statements to double check that the loan balances on the balance sheet match the balances on your loan statements. If you are working with a tax professional, they will want to review your loan statement before preparing the tax return.

4. Properly Categorize Meal and Entertainment Expenses

Changes in tax law now require businesses to list meal and entertainment expenses in separate accounts. Expenses for meals are still 50% deductible, however entertainment is no longer deductible.

5. Gather Receipts From Business Assets Purchased or Sold

Did you purchase equipment, vehicles, furniture or computers for your business in the last year? If you did, tell your tax preparer the date of purchase and what was included in the purchase price.

If you sold any business assets during the year, you will need to provide similar information to your tax professional. They will want to know what the asset was, the date it was sold, how much it sold for, if there were any expenses tied to the sale and the prior depreciation.

6. Review Last Year’s Tax Return

Looking at your business tax return from the previous year helps identify missed tax deductions or any items that seem alarmingly larger or smaller in comparison to the prior year. This step is especially helpful if you are preparing your own tax return.

7. Review Your Product Inventory

If your business has an inventory of products that are sold to customers, an important item in your tax preparation checklist is completing a product inventory. The product inventory itemizes which products have reached an age that makes them either unsellable or sellable but at a discounted price. Whether a product is “too old” to sell will be different for every business. Products that fall into either of these categories should be written off as an expense to help reduce your businesses taxable income.

8. Review Accounts Receivable

Similar to reviewing product inventory, check your accounts receivable to determine which accounts are old and need to be categorized as a write-off. An account that is categorized as old will be based on your business’s set timeframe for when a payment must be received. This could be 30, 60 or 90 days. Writing off accounts that are deemed as a bad debt can reduce your business tax liability for the tax year.

Work With a Tax Professional

Running a small business involves several income sources and expenses, making your business’s tax situation unique. Work with a tax professional, a certified public accountant (CPA) or a professional tax service to handle your small business tax filing. They are informed about current tax laws and regulations as well as deadlines to help you reduce your tax liability as much as possible.

Reach out to a tax expert today to learn more about local tax planning and small business tax preparation tips.

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The Author

Paul Daniels

Paul Daniels

Business Banking Manager, VP

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