It’s only February, but Tax Time will be here before you know it. In fact, if your business is a partnership or S-Corporation, you have less than a month! That means that you should be preparing all your documents and getting them ready to take to your tax preparer. But what exactly does that tax preparer need?
What do you take to your tax preparer?
When it comes to personal taxes, it’s pretty simple. You’ll need to bring:
- Identification information (you will have to provide Social Security Numbers for you, your spouse, and your dependents) as well as your drivers license or other photo ID
- Copies of your most recent tax returns
- Wage statements (W-2s or 1099s)
- Additional income statements (interest, dividends, unemployment income, social security income)
- Real estate documents (if you own or invest in real estate)
- Proof of expenses
Of course, when you own a small business it gets more complicated. You’ll also need to provide:
- Financial statements (balance sheet, income statement, and a cash flow statement)
- Payroll information (if you have employees)
- List of capital asset activity (did you buy or sell any equipment?)
- Vehicle log
- Summary of home-office expense (if you have a home office)
- Form 1098 for mortgage interest and property tax (if you have a home office)
- Amount paid in estimates
- Relevant business filings (LLCs, corporations, etc)
It is always better to err on the side of caution and provide more information than needed. So if you aren’t sure if your tax preparer needs it, go ahead and include it. It will save both of you time down the road.
How do you organize everything?
I know, it sounds like a lot of information. So how do you keep up with everything?
Keep personal and business documents separate.
Even if you use the same tax preparer for your personal and business returns – and yes, even if your business is a Schedule C on your personal return – you’ll want to keep your information separate. Consider having a separate folder for each. You probably have physical folders full of W-2s and receipts, and also digital folders. Make sure all folders are clearly labeled and contain everything your tax preparer might need.
Use multiple folders
The physical folders are easy enough. You’ll want to make sure they are labeled with your information, and that they are fairly well organized. For digital files, you should consider having multiple folders within one main folder.
Typically, that looks like one folder entitled 2017 Business Tax Documents. Within that folder, you would have a Financial Statements folder, a Receipts folder, a Vehicle Log folder, and any other folders that might be necessary. Organizing your documents like this makes it much easier for your tax preparer to see everything they need.
Keep things secure
If you do have digital files, please remember to share them securely as they often contain sensitive information. Most tax preparers have a preferred software they use. Dropbox or Box are often wonderful options, but there are many more available. Reach out to your tax preparer to see what they recommend, but please avoid emailing them as attachments. Your tax preparer cannot guarantee their security that way!
Of course, these are basic recommendations. Your specific situation may require more information and details. If you aren’t sure what you need to provide, contact your tax preparer. They can help you determine what you need and when you need to provide it to them. They are already neck deep in tax returns, so the sooner, the better.
Deb Howard Greenleaf, EA, CEO and Principal, of Greenleaf Accounting Services provides virtual accounting and bookkeeping services and specializes in financial management to consultants, coaches, solo professionals, and other small business owners across the US. Deb is an Enrolled Agent (EA)—an IRS-licensed tax professional—and specializes in small businesses and entrepreneurs filing Schedule C or as an LLC. As an Advanced Certified QuickBooks ProAdvisor, Deb spends her day in QuickBooks Online and specializes in providing QBO support.