13 important documents to give your accountant for tax season

1. Identification information

Your accountant will need personal information to file taxes on behalf of your small business. Here are some identification documents you will share with them:

• Social Security Number (SSN): Share the SSNs of yourself, your spouse, and any dependents. Also, include everyone’s full legal names.

• Employer Identification Number (EIN): If your business has an EIN, share it with your accountant. You can find your EIN in previous tax returns.

• Driver’s license (ID): Although not always necessary, consider sharing copies of your ID as well as your personal and professional permanent addresses.

If your small business has other employees, you may need to gather their personal information and share it with your accountant.

2. Tax return

For optimal small business tax preparation, share a copy of last year’s tax return with your accountant. Although this form is not necessary, the tax return can help your accountant get familiar with the financial health of your business. 

The tax return can also inform your accountant of what tax deductions your small business may qualify for and help expedite preparing of this year’s tax return.

3. Financial statement

Share your financial statements with your small business tax accountant. These documents communicate the financial health of your business. 

Here are some essential financial statements to share: 

• Cash flow statement: This summarizes how well your company manages its cash position and how well the company generates cash to pay its obligations or fund its expenses.

• Balance sheet: This shows a company’s assets and liabilities as well as the owner’s equity during a specific period.

• Income statement: This focuses on your company’s revenue streams and expenses over a particular period.

• Profit and loss report: This report states the earnings, revenue, and losses your business experiences in a year.

Because your company’s financial statement provides you with a formal record of all financial activities, it’s necessary during tax time to ensure the accuracy of your taxes.

4. Relevant tax forms

Every business type requires you to fill out different tax forms. The forms you need to file for each business type are:

Once you understand which category your small business falls into you can begin business tax preparation by filling out the appropriate tax forms.

5. Capital-asset activity

It’s typical for a business to have many tangible and intangible assets, and capital assets are one of them. A capital asset is a piece of property or equipment your business owns with the expectation that it will provide future benefit or value. They are typically long-term assets that generate income over an extended period. 

During the year, if you traded, bought, or sold any capital assets owned by your business, you’ll need to account for these transactions on your tax return.

Here are examples of capital assets that you will share with your accountant:

• Land: Any property that your business has owned for over a year
• Equipment: This includes research and development equipment
• Buildings: Any structures that your business has owned for over a year
• Vehicles: Any vehicles your business has owned for over a year
• Copyrights: An intangible asset that you are responsible for documenting
• Patents: Active and inactive patents need to be a part of your tax return
• Trademarks: An intangible asset that you are responsible for sharing

The sale of a capital asset results in capital gain or loss. If you use small business tax accounting software, print out any capital-asset activity so your accountant has the details necessary to file an accurate tax return.

6. Business loan information

Share any documents that state how you fund your business. Give your accountant small business loans and applicable grants in the form of:

• Business loan invoices: Show any proof of receiving a business loan.
• Funding receipts: Show any proof of receiving grant funding
• Accrued interest statements: Show any statement of interest.
• PPP loans: Share any evidence of receiving through the CARES Act.

Provide as many records of payment, reimbursements, and receipt of funds as possible with your accountant to ensure an accurate tax return.

7. Income records

When paying taxes as a small business, it’s important to share any documents that show how much income your business made in the preceding year. 

This can include:

• Bank statements: Share your most recent bank statement.
• Deposit slips: Share deposit slips from the previous year.
• Sales invoices: Share any invoices from the previous year.

Consider digitizing your income records and other financial documents to expedite the small business tax filing process through automatic business reporting services.

8. Expense records

Along with your income records, you also need to share documents that record your yearly expenses with your business tax accountant. You can generally find expense records like credit card statements on your online banking portal. You can also utilize software that automatically tracks expenses for your business.

Expense records can include: 

• Receipts: Share as many receipts as possible, from office supplies to new machinery.
• Bills: Share copies of the bills you paid the previous year.
• Credit card statements: Share your most recent credit card statements.

Some accountants will ask for your original receipts, including indirect and direct expenses, while others will only want a summary. Check with your accountant to see which they prefer, and compile your documents before scheduling a meeting. 

9. Potential deductions

One of the best things about hiring a tax accountant is that they can help you find new tax deductions that your small business qualifies for.

For accountants to find these deductions, you’ll need to share the following information:

• Home office expenses: If you work from home, you can deduct a part of your living expenses with the home office tax deduction. 
• Business vehicle mileage log: You can deduct that mileage if you drive for work.
• Business travel expenses: You can deduct flights if you travel for business.
• Charity contributions: Your charitable contributions are tax-deductible.
• Health insurance: You can deduct how much you spend on health insurance.
• Utilities: Your monthly utilities for your business are tax-deductible.
• Marketing materials: You can deduct anything you spend on marketing
• Legal fees: Deduct any fees spent on legal services

For optimal results, share any documents that have a chance of qualifying as a deduction. Speak with your tax accountant if you are unsure which expenses will meet the mark.

10. Payroll information

Send your business tax accountant your payroll data as well as any pertinent employee information, like their full names and SSNs. Here are the tax forms you should include:

• W-2s: This shows the amount of taxes your employer withheld.
• W-3s: This is how employers report income to the IRS.
• 1099-MISCs: This form is how you report contractor income.

Let your tax professional know what kinds of employees your small business has, like contractors, full-time, and part-time employees, so they know how to properly fill out your tax return.

11. Inventory information

If your small business does a yearly inventory check, share the inventory data with your tax accountant. It may be best to complete a fresh inventory check before submitting your tax return.

You will also need to include provide cost of goods sold (COGS) information, showing how much it costs to produce your goods and services.

12. Investment Information

Make sure to share any income your business earns from investments and appreciation of the following asset classes:

• Stocks: Share any stocks your business owns shares of.
• Bonds: Share any bonds that are in your professional business portfolio.
• Real estate: Share any investment properties that your business owns.
• Cryptocurrency: Share the amount of cryptocurrency your business owns.

Even if your business did not benefit from appreciation or earn money from your investments in the preceding year, it’s still important to let your accountant know which assets your business invests in for future tax returns.

13. Mortgage interest and property taxes

If you work from home or operate a business from your residential property, you can claim this amount on your tax return. Calculate how much of your home you dedicate to business operations and claim the same percentage when you file your taxes.

A 1098 form can showcase the property tax and mortgage interest amount you plan on claiming. Give these to your accountant even if you operate a home business for only part of the year.

To help with small business taxes, use the tax preparation checklist to help guide you through which documents you may need to file and share with your small business accountant. 

Before you hand off these documents to your small business tax accountant, double-check this years tax dates to ensure you’re hitting the right deadlines.