What Information Does My Accountant Need To Prepare My Tax Return?
Simplify your small business taxes by learning about the tax forms and information your accountant needs to file your tax return.
What do you need to give your accountant for small business taxes? Gathering personal information, prior year’s tax returns, payroll data, and other documents ahead of time can help you save time and money this tax season.
In this post, we’ll talk about the specific information your tax accountant needs in order to file your small business income taxes. We’ll also provide expert tips and tricks along the way to help make this the easiest tax season yet.
Table of Contents
- Types Of Small Business Taxes
- 12 Things Your Accountant Needs To File Small Business Income Taxes
- Should Your Business Hire An Accountant?
- Important Tax Deadlines
- Bonus Small Business Tax Preparation Tips
- The Bottom Line On What Information To Bring Your Accountant For Tax Preparations
- FAQs About Preparing Business Taxes
Types Of Small Business Taxes
In this post, we’ll be focusing on the documents and information your accountant needs to file your income taxes. However, it is important for you to first understand the types of business taxes you have to pay or withhold as a business owner.
12 Things Your Accountant Needs To File Small Business Income Taxes
When it’s time to file your small business income taxes, take control by gathering these documents and information in advance.
Looking to save money on your business’s tax return? Talk to your accountant about the ERC tax credit or work with one of these trusted ERC specialists to see if you qualify for the employee retention tax credit.
1. Your EIN Or SSN
You will need to furnish your tax accountant with basic personal information including your legal name, current address, and social security number. Bring your social security card to your tax appointment.
If you have an Employer Identification Number (EIN), you will need to provide that, along with your legal business name.
2. Your Previous Year’s Tax Return
Make sure to come with your previous year’s tax return. This helps the tax accountant get a better understanding of your business, and also gives quick information about the deductions your company has (or hasn’t) been taking.
3. Your Yearly Financial Business Reports
Your accountant will need copies of your basic financial reports for the year. These generally include:
- Profit and Loss Report (or the Income Statement)
- Balance Sheet
- Statement of Cash Flows
You should be able to print these basic financial reports from nearly any accounting software program. Contact your accountant or tax preparer to see if there are any additional reports they might require or find helpful.
4. The Appropriate Business Tax Forms
The tax forms your business is required to fill out depend entirely on your business type. These are the forms that may be required for your business:
- Freelancers & Sole Proprietors: 1040, Schedule C, Schedule C-EZ, 1040-SE
- Partnerships: 1065, 940, 941, 943
- S Corporations: 1120-S, Schedule K-1, 940, 941, 943
- Limited Liability Corporations (LLCs): 1065, 1120-S, Schedule K
- Single Member Limited Liability Corporations (LLCs): 1040, Schedule C, Schedule E, Schedule F
To be certain about which forms your company is required to file, visit the IRS’s Forms and Instructions for Filing and Paying Business Taxes page. Here you will find specific forms and instructions for each business type. Bring the necessary forms to your accountant in order to file your tax return.
Note that your tax filing date may be affected by your business structure.
5. Your Business Asset Information
Your accountant will need to know about any assets you’ve bought, sold, or depreciated during the last year. Bring receipts, documents, or reports related to your assets.
Tip: Some accounting programs have fixed asset reports or listings that you can run.
6. Business Loan Information
If you’ve acquired a new loan in the last year, bring the loan agreement with you. Also, bring records of any loan payments and/or accrued interest. This will ensure that your accountant is up to date on your company’s total assets and liabilities.
If you received a loan or grant through the Paycheck Protection Program (PPP), the Economic Injury Disaster Loan (EIDL), or the EIDL Advance programs, bring receipts, invoices, and other documentation to your accountant to claim deductions for qualifying expenses to lower your tax liability.
7. Your Income Records
To verify the income amount on your profit and loss statement, you need to provide your accountant with income records. This includes bank statements, deposit slips, and sales invoices.
8. Your Business Expense Records
In order for your tax accountant to verify your company’s expenses and find the correct deductions, you’ll need to bring several types of expense records, including:
- Bank statements
- Credit card statements
- 1098 Mortgage Interest & Property Taxes form
9. All Deductible Expense Information
Some business expenses require more than just receipts. If you’re claiming any of the following deductions, make sure you bring the proper information to your accountant:
- Home Office Deduction: If you have a separate home office that is used exclusively for business, you may be eligible for the home office deduction. You should be prepared to provide information about the square footage of the home/office and expenses paid for mortgage or rent payments, repairs, insurance, and utilities.
- Business Vehicle: If you use your vehicle for business, you also may be eligible for a vehicle deduction. Track all of your mileage throughout the year and bring a mileage log to your accountant or tax professional, along with any receipts related to car expenses.
- Business Travel: Businesses can write off meals and travel expenses, provided these expenses aren’t “lavish or extravagant.” Bring all receipts and any travel tickets or itineraries to your tax appointment.
- Charitable Donations: Bring all receipts and statements related to your business’s charitable donations.
Make sure you are taking all of the small business tax deductions your business qualifies for.
10. Your Business’s Payroll Data
Your accountant or tax professional will also need your payroll data from the year. Bring copies of your employee’s W-2s, W-3s, and 1099-MISCs. Also, gather health insurance records (as these can count as a business deduction) and any information regarding bonuses.
Payroll software makes this information readily available. Check out our top payroll software recommendations to make gathering this information easier come next tax season.
11. Your Opening & Ending Inventory Total For The Year
Several tax forms require a COGS (Cost of Goods Sold) closing balance for the year. You should already have taken an opening balance of your inventory at the beginning of the year. Now do another inventory count and bring the results to your accountant so they can properly fill out your tax return.
12. Any Stock & Bond Information
Bring information related to all stocks and bonds your business has attained or sold during the year. You’ll also need a record of any owner’s investments made into or withdrawn from the company during the year.
Should Your Business Hire An Accountant?
While it may seem like an extra expense, hiring an accountant offers numerous benefits to your business. In addition to helping you file your taxes, an accountant can help you save time on financial tasks, provide in-depth analysis and reports, and can even help you determine if a small business loan is a smart financial move for your business.
Consider hiring an accountant for:
- Starting A New Business: An accountant can help you choose the right type of business entity, set up your EIN and state business licenses, and guide you in choosing the right accounting software.
- Incorporating Your Business: If you are starting out and want to become an LLC or if you want to make the jump to incorporating your business, an accountant will guide you through that process.
- Business Advice: One of the biggest benefits of hiring an accountant is the business expertise and knowledge they bring to the table. Accountants can provide advice on everything from cutting expenses to tax deductions.
- Planning For The Future: If you need advice on how to grow your business and prepare for the future, an accountant can offer guidance and help you create a business plan.
- Managing Cash Flow: An accountant can help analyze cash flow trends, give cash flow predictions, and offer suggestions to improve your financial situation.
- Buying Or Selling A Business: If you are considering buying a business/franchise or expanding your current business, an accountant will be able to assess if the purchase is a wise financial move. If you need to sell your business, an accountant will walk you through the process.
- Buying Or Selling Business Assets: Talk to your accountant before buying or selling business assets like property, equipment, office furniture, etc. Because accountants know your business finances, they’ll be able to tell you if the purchase is a wise investment.
- Facing A Tax Audit: A CPA, or certified public accountant, can legally represent you and your business before the IRS in the case of an audit.
- When Going Public: Public corporations are required to have audit reports to show to investors. Only a CPA can prepare these reports for you.
Important Tax Deadlines
Whether you file yourself or use an accountant, failure to file and pay your taxes on time can result in hefty penalties and additional interest. Even if you file an extension on your federal return, you’re still subject to interest and late-payment penalties.
If you’re unable to pay your tax bill, you shouldn’t avoid filing your taxes. Not only will you owe more in penalties and interest, but failing to pay or respond to the IRS could result in tax liens and wage garnishments. Your best course of action is to file on time, pay your tax debt as soon as possible, and keep communication open with the IRS.
Here is what a normal tax year looks like:
|Tax Type||Tax Deadline|
|Income Tax||April 15|
|Federal Income Tax Extension||April 15|
|Income Tax w/ Extension||October 15|
|Self-Employment Tax||April 15|
|Estimated Quarterly Taxes||April 15, June 15, September 15, January 15 (of the following year)|
|Excise Tax||April 30, July 31, October 31, January 31|
If a deadline falls on a holiday or weekend, taxes must be filed and paid on the next business day.
When To File An Income Tax Extension
You may want to file a tax extension in some scenarios, such as:
- You have missing tax information
- You have potentially inaccurate information
- You plan on being overseas
- Unexpected scheduling issues came up
Filing for an extension does not give you additional time to pay any taxes due to the government, so make sure you pay by the current tax deadline. Otherwise, you will accrue penalties and interest that increase your tax liability. Failure to pay your taxes can also invalidate your extension.
To file an extension, simply submit the correct form to the IRS by the income tax deadline. Use:
- Form 4868 if you are self-employed, a contractor, or a single-member LLC
- Form 7004 if you run a corporation, partnership, or multimember LLC
Bonus Small Business Tax Preparation Tips
In addition to having all of your documents ready to go, there are a few other things you can do to be prepared for tax season.
The Bottom Line On What Information To Bring Your Accountant For Tax Preparations
Taking the extra time to gather and organize the proper tax information will help make the tax return process a breeze.
To make this tax season even less painful, check out our free Small Business Tax Prep Checklist to ensure you’re fully prepared for small business tax filing.
Good luck and happy filing!