Most business owners understand they need help with filing their company’s tax return, but they often don’t know exactly what to bring to tax appointments. Your tax professional is sure to have all the tax code knowledge they need to get you the best return, but you’ll have to help with the specifics.
Preparing your small business tax return can be a very challenging process, especially if you try to go it alone. Avoiding the stress of this challenge is just one of the reasons you should hire a tax professional to take care of your business taxes for you. A tax expert can also save you a great deal of time and money. Perhaps most importantly, a tax professional can help make sure your books are in good order.
Your Participation is Still Required
However, you’ll still have to help this process along. Tax professionals aren’t mind readers or magicians, so you’ll need to come to your appointment fully prepared. Whomever your tax professional is, they’ll need you to bring a number of official documents along. They’ll also need you to come equipped with the information they need to optimize your return.
In the following sections, you’ll find out what kind of information your tax expert will need to file your business taxes in an accurate and timely manner.
First, your tax consultant will need you to provide a bit of personal information. As the owner of the business, your accountant will need things like your full name, social security number, and current address. You’ll also need to give them your EIN or Employer Identification Number (if you have one), as well as the legal name of your business.
Tax Return for the Previous Year
You should also bring along your tax return for the previous year to make the process more efficient. This will a) help them better understand the nature of your business, and b) show them exactly where to look to find all of your available deductions.
Your Company’s Financial Reports
Your tax accountant will require copies of the following company financial reports:
- Balance Sheet
- Income Statement and/or Profit and Loss Report
- Cash Flow Statement
Each of these reports gives your tax consultant specific information they need to file your return. The balance sheet lists your assets and liabilities, while the profit/loss report shows how much money your business earned and lost over the previous twelve months. Lastly, a cash flow statement outlines all the transactions that affected the cash coming in and out of your accounts and will help you understand how to speed up your business’s cash flow.
Bring All Required Tax Forms
The tax forms that the IRS requires from your company depends on what kind of business it is. Depending on your business’s status, you may need to bring one or more of the following forms:
- Schedules C, E, F and 1040 Form for Single Member Limited Liability Corporations (LLC)
- Partnerships typically require Forms 940, 941, 943, and 1065
- Sole Proprietors and/or Freelancers will need to bring Forms 1040, 1040-SE, Schedule C and Schedule C-EZ
- Limited Liability Corporations (LLC) must bring Forms 1065, 1120-S, and Schedule K
- S Corporations will need to provide Forms 1120-S, 940, 941, 943, and Schedule K-1
If you’re uncertain about what forms to bring to tax appointments, you can check the IRS web page ‘Instructions for Filing and Paying Business Taxes.’ Here, you’ll find information on the different types of businesses, as well as each form you’ll need your tax expert to help you fill out. Your tax consultant will need all the applicable forms before they can file an accurate tax return.
A tax accountant requires all the information regarding the business’s assets: what was purchased, sold, and may have appreciated or depreciated in value during the last financial year. All receipts, proof of purchase, sales agreements, or other documentation relating to the assets should be provided. Check to see if your accounting software gives you a listing or reporting option on fixed assets. This can make the process a lot easier.
Provide any information regarding loans, lines of credit, and any other debt that the business has acquired in the last year. Bring any loans or other agreements as well as receipts for payments that have already been made on any interest and outstanding balances. Any money the business owes is called a liability. Tax accountants need to keep track of those as well.
Proof of Income
To support the income reflected on your profit-and-loss or income statements, you will need to show your accountant proof of income in the form of bank statements, invoices, banks deposit slips, and any other relevant documentation. Keep these through the year to give to your tax consultant.
Record of Expenses
The accountant will need proof of business expenditures your company made throughout the year. Anything bought for the business applies. Once they have them, they can evaluate the deductions you may be eligible for on your taxes. Proof of expenditure includes:
- Bills or statements (including credit cards)
- Bank Statements
- Mortgage Interest and Property Taxes Form 1098
Make sure you are filing your receipts neatly and properly throughout the year. Your accountant can then spend less time organizing the paperwork before they can file your tax return. That will cost you less in the long run.
Additional Information for Deductible Expenses
Any expenses you think are deductible will require supporting documentation. Keep all paperwork for your accountant. They won’t be able to claim the deductions without it.
The home office deductible is evaluated very harshly by the IRS. Small businesses have been known to abuse this opportunity in the past. You will need to provide proof that you are using your home as an office. This includes the square footage of the area or room in your home that is being used for business purposes. You will also need to give evidence of expenses such as rent, utilities, mortgage, insurance, and repairs or renovations that were made specifically for the office at home. If you can’t prove it was for the business, it can’t be deducted.
If you are using a personal vehicle for business purposes, you may be able to deduct those expenses on your taxes as well. Keep a log book to track any mileage on the clock for the year as well as receipts and documentation for any maintenance and other expenses for your accountant.
Any expenses related to travel, including entertainment or meals, can be written off as a business expense. Travel itineraries, tickets, and receipts will be called to be audited. Any extravagant expenses will be scrutinized heavily by the IRS, so be sure to be prepared to justify claims of this nature.
If you can prove them, charitable donations can also be tax deductible. Receipts or acknowledgment from any charities helped throughout the year should be given to your tax accountant. Ask for these receipts when you make the donation.
All payroll data for the past 12 months including W-3’s and 1099-MICS’s for each employee will need to be turned in to a tax expert. Health insurance and employee bonuses may also be deductible. Any pertinent information should be collected.
The Value of Knowing What to Bring to Tax Appointments
Tax season is an incredibly hectic time for you, your employees, and your tax specialist. Needless to say, none of you has time to waste during this time of year. Now that you know what to bring to tax appointments, you’re that much more likely to have the best tax experience of your entire business career.
About Lena Georgiev Consulting Services
Lena Georgiev provides accounting, bookkeeping and tax solutions that fit the needs of small businesses and individuals. Lena also has project management as well as life coaching skills which help clients with organization and real life advise. Call now for a free estimate on services!
Email: [email protected]
Phone Number: 847-420-8242
License Title: Registered Certified Accountant in the state of Illinois
License ID: 239.002263