Set Yourself Up for Success: The Definitive Tax Checklist

Getting a jump on tax season is always a good idea. Whether you’re self-filing or working with a tax accountant, our definitive tax checklist will help. Taxes are a fact of life. Not too many people enjoy doing or paying them! The better prepared you are, the easier it’ll be. 

 

So sharpen your pencils, folks, and let’s get started!

 

Small Business Tax Prep Checklist

This guide is written with small businesses in mind. Corporate taxes may have unique challenges that a qualified tax professional should address. 

 

Critical Business and Personal Records

 

• Personal documents related to the business owner(s) include SSNs, ownership division (percentages), acquisition dates, and any distribution information for other business owners, dependents, and spouses. 

 

• Previous year’s tax returns (federal and state). You’ll need both personal and small business returns filed. 

 

• Financial statements. Profit and loss statements, journal entries, balance sheets, etc. 

 

• General ledger statements should detail every expense and category you intend to deduct.

 

• Records of income: 1099s from you and W2s from your spouse, as applicable. 

 

• Records of tax payments made during the tax year (state, federal, property, etc.)

 

Business Expense Records

Retain all receipts for business expenses you plan to deduct. Itemize everything by category and vendor name. The following are some of the most common categories:

 

• Meals and entertainment
• Equipment, storage, office rental/lease costs
• Internet and mobile phone
• Office utilities
• Office supplies
• Advertising (includes marketing materials like brochures and business cards)
• Legal and accounting fees
• Bank fees
• Travel expenses (hotel, airfare, etc.)
• Business insurance
• Business license, permit fees, taxes

 

Home Office Expenses

Don’t forget to deduct the relevant expenses if you work out of your home, even part of the time. You’ll use Form 8829, Expenses for Business Use of Your Home, on Schedule C (Form 1040). You can roll expenses over to the next tax year if you exceed the allowable limits. 

 

Here’s what you’ll need to know to figure out what you’re entitled to deduct:

 

• Your home’s square footage (area)
• Square footage of home office space

 

This calculation will help you determine the percentage of your home’s area devoted to home office use and what portion of your home’s expenses you can deduct as a business expense. 

 

• Utilities and repairs
• Homeowner’s insurance or renter’s insurance
• Mortgage interest (from Form 1098)
• Property taxes

 

Vehicle Expenses

Record mileage and all business-related vehicle expenses in a logbook and retain itemized receipts. Good records will also help you substantiate expenses like business meals, hotel costs, etc. 

 

• Gas and oil
• Repairs and maintenance
• Lease payments
• Insurance and tax
• Parking and toll fees

 

Assets: Purchased or Sold

Maintain receipts (invoices, purchase orders, canceled checks, etc.) for business assets bought or sold during the tax year. These may include:

 

• Vehicles
• Real estate
• Equipment
• Computers
• Inventory 
• Office furniture
• Intellectual property
• Any tradeable securities

 

Depreciation

• Record date of acquisition and cost of all business assets
• Record selling price and dates of assets sold during the tax year

 

Payroll and Independent Contractor Details

Gather copies of:

 

• Federal and state payroll tax returns (Form 940)
• W2s and W3s issued to all employees

 

You will also have to issue a 1099 to any subcontractor you have paid over $600 to over the year. This could include payments for occasional services, consulting, sales commissions, bookkeeping, etc.

 

Benefits and Fringes

You will need to keep records if you provide benefits or pay into programs for your employees. Some examples include:

 

• Health Savings Plan (HSA) contributions
• Health insurance premiums
• Pension contributions
• Profit sharing contributions

 

If you are self-employed…

 

Self-employed individuals must also keep track of contributions made to: 

 

• HSA accounts (Form 5498-SA)
• IRA contributions (From 5498)
• Health insurance payments
• Job-related educational expenses (training, etc.)
• Job-hunt-related expenses (recruiter fees, accommodation, travel expenses, printing, etc.)

 

Self-employed individuals must also provide the previous year’s Adjusted Gross Income (AGI), which can be found on your tax form (1040) or 1040-SR if you’re over 65. 

 

Other Documents and Records You Might Need

In addition to the above categories, here are a few relevant categories you may want to track. Be sure to keep detailed receipts and all appropriate documentation. 

 

• Charitable contributions. You’ll need a receipt for any donations exceeding $250 or for vehicle donations. If you donate a car, you’ll need Form 1023. Only accredited tax-exempt organizations are allowed. Details must be included on the receipt, along with a statement that no goods or services were provided in return. 
• Medical expenses, including dental, chiropractic, therapy, etc. 
• Student loan interest: use Form 1098-E.
• Education and training: use Form 1098-T.
• Alimony payments: you will need your ex’s SSN and full legal name. 
• Child and dependent expenses require the full name and SSN, as well as the tax ID number of your childcare provider. If your dependent is in school, you will need their school records to prove their full-time status to be eligible for related deductions. 
• Teacher expenses: educators may claim up to $300 of qualified expenses, such as mileage, classroom materials, business use of home expenses (tutoring, etc.). Twenty percent of continuing education and tuition expenses can also be deducted, up to $2000. 

 

If You Were Affected by a Disaster

If you or your business were displaced or otherwise suffered loss because of a federally declared disaster, you may be eligible to deduct related expenses and losses. You may also be able to defer filing and tax payments through the IRS Disaster Tax Relief Program. 

 

Under the program, you may be granted extra time to pay, more time to file, waived penalties, and get access to your refund faster. You may also be eligible for a casualty loss deduction if your property was damaged or destroyed. 

 

FEMA offers a handy search tool to verify federally declared disasters. Any type of business can apply, including sole proprietors and self-employed individuals. 

 

Disaster tax relief can be claimed on Form 1040 for the current tax year. Losses must be claimed on Form 4684.

 

Are You Ready for Tax Season? 

It’s time to put last year to bed! Gathering your documents and getting organized now ensures an easy-breezy filing. Still need help? We’re here for you! Reach out to the TaxSmart team today to get started.

Posted: 03/03/2025