Every year, the same thing happens as tax season looms: we get a bunch of last-minute, frantic clients worried about getting their taxes paid on time. They throw us every document they can find, get frustrated when we ask follow-up questions and request additional information (which they often don’t have prepared), and end up filing late because they need a new bookkeeper and accountant to fix a multi-month (or sometimes multi-year) mess (not to mention paying extra for tight turnarounds).
We want to give you the tools to get ahead of this gigantic headache. This list represents the 13 most critical pieces of information you need to provide your tax preparer. If you know right now that you do not or will have some of these elements, talk to your finance team, understand why, and come up with a plan in the coming few weeks to get these items together.
13 critical items your tax preparer needs from you
- Trial balance that reflects balances in each of your company’s general ledger accounts
- Reconciled statements for the entire year, including bank, investment, credit card, and loan accounts (Don’t have these prepared? Try outsourcing these now so you’ll be in great shape come March/April.)
- Documentation for transactions within that past year that are especially unique to prior years
- Fixed assets purchased in the given tax year, with information necessary for depreciation, including the year put into service, whether the asset was new or used, cost, and weight (if a vehicle)
- Fixed assets disposed of in a given tax year, with the same details as needed for asset purchases
- Loan documentation that reflects principal versus interest payments
- Payroll tax returns for each quarter with form 941
- Sales tax returns from throughout the year
- Aging details for Accounts Receivable and Accounts Payable
- New rental, equipment lease, or utility agreements and related prepaid expenses
- Distributions to partners or owners
- All 1099 contractor information (Here’s what you need to know about 1099s.)
- And, finally, If you’re filing taxes on a cash basis but like to analyze your business on an accrual basis, be prepared to explain any adjustments that the tax accountant needs to back out to file on a cash basis.
If you’re looking at this list and feeling a guttural sense of dread, chances are your bookkeeper and accountant have some work to do before they make the hand-off to your tax preparer. For a free consultation on what needs doing before you hire a tax preparer, set up a time to talk to Paro’s finance experts by filling out this form.
The following Paro freelancers contributed to this list and to our End-of-year Tax Guide:
Philip Wong has nearly 30 years of experience in Payroll Management and Payroll Tax and Compliance. He has worked in the public, private, and non-profit sectors, and his experience extends to small companies and startups. Philip holds an MBA and undergraduate degrees in Accounting and Finance. He is a native of Boston, Massachusetts, where he currently practices.
Shaan Afridi has five years of accounting experience, with a focus on business and individual income tax return preparation. He is a CPA certified by the State of California and a chartered accountant certified by the province of British Columbia, Canada. Shaan earned his degree from San Jose State University.
Ross Sumner a CPA in the state of Virginia with more than five years of experience in tax and accounting. In addition to supporting Paro’s clients in the professional services and real estate industries, he currently works for a small firm in Midlothian, Virginia. Prior to that, he spent two years at RSM (formerly McGladrey), so he has helped individuals and entities of all sizes and needs in a short amount of time.