The small business year-long tax documents checklist

The small business year-long tax documents checklist

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Was tax season a hassle this year? Here’s the secret to making sure that never happens again: prepare for your taxes all year long, not just in the spring. It will not only save you time, but also help you make sure tax payments are as accurate as possible.

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This year, there were fewer tax law changes and few remaining pandemic complications—making 2023 one of the most “normal in years,” according to Accounting Today.

But normal doesn’t mean painless. The tax filing process can still pose many challenges, and just like your personal income tax return, paying small business taxes can be more difficult than you might anticipate.

Most small business owners and their accountants spend a lot of time chasing down tax documentation such as bills, receipts, and more. And the stakes are high: missing documentation can lead to fewer exemptions and potentially higher taxes.

For some companies, taxes aren't even over yet—companies that extended are facing tax deadlines this fall.

How can small business owners, accountants, and tax professionals make the next tax deadlines easier? Start by automating AP, AR, and spend and expense management now so that finances are in order come next tax season. Our small business tax preparation checklist is a great way to get started.

The small business tax preparation checklist

Not sure where to start with tax prep for your small business? Follow these steps—set up as a convenient checklist—to make sure you’re prepared for tax season.

Step 1: Gather personal and business information

Taxes are going to be so much simpler if you have everything at your fingertips. Here’s what you’ll need on hand.

Personal information required for business taxes

Just like filing your personal income tax return, a small business owner needs to include some personal info. You may know many of these details by heart, but make sure you have:

  • Your address
  • Your social security number
  • Federal tax ID number
  • Identity protection PIN (if you have one)
  • Previous year’s tax returns

If you’ve had your identity stolen in the past, you may have requested an identity protection PIN from the IRS. If so, you’ll need to use it every time you file your small business tax return in order to verify your ID.

Business information required for business taxes

Keep this tax document checklist handy to remind you year-long of all the business information you’ll need when you’re ready to file your business tax return.

Business income documents

  • Accounting journals and ledgers
  • Balance sheet
  • Income statement

Business expense documentation

  • Receipts for business and office expenses
  • List of your small business tax deductions and tax credits

Documentation for employment taxes

  • Payroll reports
  • Gross monthly payroll
  • Deductions held from gross wages
  • W-9: Employee tax withholding
  • I-9: Employee legal working status
  • W-2: Wages and taxes

Subcontractor forms

Home office documentation

  • Mortgage interest or rent amount
  • Utilities
  • Documentation of other home office deductions

Step 2: Know which business tax forms you need to file

What do businesses need to file every year? That depends: is your business a sole proprietorship, partnership, corporation, S corporation, C corporation, or LLC? The answer will determine which forms apply to your business.

The IRS has this resource for small business tax forms to point you in the right direction.

You also need to understand all of the tax responsibilities of a small business owner. This includes:

  • Understanding your state income tax withholding requirements
  • Knowing whether you need to pay excise taxes (the IRS has excise tax details here)
  • Finding the right deductions and tax credits to make sure you fill out your tax forms accurately
  • Knowing the right tax deadlines for your business
  • Filing for an extension if you need one

Step 3: Use automation tools to digitize income and expense records

While filing your taxes, you’re going to refer to your income and expenses multiple times to make sure you're tracking everything correctly.

Smart accounting software will simplify compiling income and expense records for small businesses, so you’ll always know your total taxable income. It will not only digitize but also keep it organized in a single system, so you’ll never have to go hunting through different devices and drives to export the data you need. This means that at any given time, all of the information you need is only a few clicks away.

The right tools will also allow you to give an accountant auditor access to view all of the payments and receipts they need to keep you audit-ready all year long.

In addition, the right technology will help you streamline financial operations, improve accuracy, and ensure compliance with tax regulations.

Let’s look at how the right solutions can make a difference during tax season—and all year long.

Go from shoebox to streamlined

A “shoebox” is the package a small business presents to their accountant or tax professional each year, full of paper receipts, notes, and more. These days, the shoebox is more often a mix of media: paper, emails, PDFs, spreadsheets, bank statements, notes, and more.

The problem with a shoebox is that it focuses on financial processes after they have already happened. It can be a hassle for a small business owner to find and gather, and time-consuming for accountants to organize and follow up on.

This is why a small business tax checklist can only take you so far—it won’t do the work of organizing for you. If you’re wondering how to prepare for small business taxes without resorting to a cardboard box, the key is digitizing your records with reliable software.

Adopting a software solution that automates AP, AR, and expenses means businesses and accountants are no longer playing catch-up with processes and documentation. Instead, they have captured the necessary information year-round so it’s ready for filing taxes.

More importantly, it helps businesses and accounting firms run more efficiently year round. With this approach, there is no final “shoebox” at the end of the year, but an ongoing record of everything your business (and your accountant) needs at any given time.

Smart software is the key to filing your business tax returns

Since you have to file taxes, you might as well make it as easy as possible. Manual processes are not only slow and inefficient, but they end up costing your business more when there are mistakes. If you automate your financial operations—allowing you to create digital records and real-time documentation—you’ll be ahead of the game for your state and federal taxes next year.

Here are just a few ways that digital transformation can help you prepare for tax season:

  • Important documents that enter your system are automatically digitized, so every bill, invoice, payment, and expense documentation is organized, searchable, and audit ready.
  • Recommend codes and evaluate expenses against corporate guidelines.
  • Digitize workflows, ensuring the proper processes for accounts payable (AP) and accounts receivable (AR) are followed.
  • Support digital payments so each dollar incoming and outgoing is tracked.
  • Help you eliminate data silos so that tax-relevant information moves from email inboxes and spreadsheets to one platform.
  • With permission-based access, you can collaborate with other employees to create a more cohesive picture of financial activities.
  • Track every AP and AR transaction your company undertakes. For bill payments, each person, invoice, and time and date are noted within the system. In a few clicks, you can see who approved the payment, how it was paid, the canceled check, and more.

This allows you to start the tax season organized, properly documented, and audit-ready.

A spend and expense management system, such as BILL Spend & Expense, makes supporting your tax prep and accountable plan easier and faster. An accountable plan is a system that allows certain, qualified employers to reimburse employees for certain purchases on a non-taxable basis. For business expenses and expense reimbursement, maintaining the accountable plan is usually the most challenging and time consuming portion of IRS compliance.

75% of customers surveyed say BILL helps them and their accounting pros be much more prepared at tax or audit time.*

Year-round benefits

Digital transformation makes taxes easier every month of the year through automatic spend tracking in real-time and easy digitization of vital tax documentation. Tools with capabilities like BILL Spend & Expense, our spend and expense management solution, can support SMBs in simplifying tax management and freeing up time for bigger-picture tasks.

With BILL, the entire workflow—from invoice entry through payment—is tracked, making your business audit ready at all times.

You can also manage your entire corporate card program with BILL Spend & Expense. From requesting and approving budgets to tracking real time spending, BILL Spend & Expense helps companies and accounting firms control costs and increase visibility into real-time spend. This helps companies and accounting firms control costs and see exactly what they’re spending, without waiting for credit card statements at the end of the month.  

And if you want to get organized, you’ve come to the right place. BILL makes sure all of your tax documentation is in one place before your filing process even begins. Plus, accountants have everything they need from their clients to file small business taxes—and explore potential tax breaks.

What about accountants?

Accountants probably don’t need to refer to a small business tax preparation checklist, but they do need your business’s financial info to file your tax forms.

The BILL Accountant Console and the BILL Accountant Advisor Program help accounting firms manage AP and spend management for multiple clients. They not only have important tax information, but also offer the opportunity for accountants to provide new services (client advisory services) that will help foster stronger ties with clients.

Check out this case study about how the firm Lescault & Walderman were able to build a more efficient CAS practice with help from BILL.

A small business tax preparation checklist is just the beginning

We hope our tax prep checklist helps you get organized—but you’ll need much more than just a list of documents to get organized for tax season. If you digitize all of your data and documents with BILL, you’ll have everything already at your fingertips at tax time.

And BILL does much more than just prepare you for taxes—learn how BILL can streamline your accounts payable.

The information provided on this page does not, and is not intended to constitute legal or financial advice and is for general informational purposes only. The content is provided "as-is"; no representations are made that the content is error free.