Getting small business paperwork in order before tax season mostly means knowing what your accountant or tax software will ask for and having it all in one place. Owners tend to find the gaps late, such as a missing receipt, an unsigned contractor form or a bank statement that was never downloaded, and each one takes far longer to track down in March than it does now. Working through the records in a set order keeps the job manageable.
Sort Income and Expense Records
Start with one folder, digital or paper, for each category your return will cover, which usually means income, expenses, contractor or payroll payments and last year’s filed return. Pull invoices, sales reports and payment processor statements into the income folder, then match receipts to bank and card statements so every expense has proof behind it. Deductions are easier to support when you keep detailed records throughout the year, so add new receipts weekly and scan thermal paper receipts before the print fades.
Filing, Mailing and Proof of Delivery
Documents that go out on paper, such as signed forms, contractor paperwork or business correspondence, are easier to stand behind later when you can show exactly when they were sent and when they arrived. Printing Certified Mail Labels before the envelopes are sealed gives each item USPS tracking and delivery confirmation, and an electronic return receipt adds the recipient’s signature when one is needed. Staple the mailing receipt to your copy of whatever was sent and note the date in your records folder straight away. For anything filed electronically, save the confirmation page or email in the same way. Keep a simple log listing each item, the date it was mailed, the tracking number and the date it arrived, so you have one place to check if a client, vendor or tax office asks about it months later.
Review Everything Before You Hand It Over
Set aside an hour to compare your totals with your accounting software, bank statements and last year’s return, looking for categories that appear unusually high, low or empty. Owners who already do a quarterly review of their books will find this step quick, since most categories have been checked once already. Confirm that every contractor you paid has a completed W-9 on file and that your payroll totals agree with your quarterly filings, since those are the records your preparer needs for year-end forms. Check that each bank and credit card account has a statement for every month, and download any that are missing while the online history is still easy to reach. Send the full set to your accountant with a short note listing anything unusual, such as large equipment purchases, new contractors or a change in business structure.
Once the folders are complete and the mailing receipts are filed, the remaining work is answering your accountant’s questions instead of hunting for documents, which leaves time to plan payments and deductions, and to ask your accountant which records will matter most to them in the coming tax year. Put a reminder on your calendar for the same week next year so the routine repeats while the details are still fresh.
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