How to get your business ready for tax season

If you’ve been working hard on your business, planning next year’s goals, brainstorming your content, and figuring out how much time you can take off for the holidays and then BAM realized you need to deal with getting your business’s books ready for your tax accountant - you’re not alone! 

It can be very overwhelming to think about what, exactly, you need to do to get your tax documents ready, so I’ve written this guide for you. 

Note: You’ll want to start this process ASAP, but you won’t send documents to your tax preparer until after the new year, to give everything time to clear your accounts. 


Small business finance tips || How to get your business ready for tax season by The Wiser Miser. It's time for tax preparation so come and learn how to do your taxes.


#1 - Gather info about:

Your revenue and business expenses

  • Date, payee/payer, amount, account it went into/out of, and expense category 

  • Don’t forget business transactions that happened in a personal bank or credit card account

People you hired

  • Who are US-based individuals, sole proprietors, or LLCs (unless they’re treated as an S Corp for tax purposes)

  • That you paid $600+ this year

  • If you haven’t already had them fill out a W9 for your files, do that now 

    • Remember: the 1099 that you’ll send these folks is something you send to them to cover your ass. You need this if you get audited. They don’t. It’s important. 

Taxes you paid

  • Federal and state quarterly income taxes

  • Sales or use taxes (if applicable)

Personal money you put in or took out of the business

  • You want to have the same level of detail as the income and expenses - date, amount, account at minimum

  • Include personal money you put into the business (capital contributions or owner’s equity) as well as business money you took out to pay yourself (owner’s distributions or draw)

  • Personal expenses in a business account are included here as well (like if you had the wrong card as default on Amazon) as part of your pay

# 2 - Reconcile everything

  • If you’re using an accounting software like Quickbooks or Xero, you’ll reconcile the software to your bank accounts

  • If you’re using a spreadsheet, make sure you’re not including income that hasn’t come in yet (like an invoice that a client hasn’t yet paid) or expenses that haven’t cleared yet (like a check you wrote to a contractor that hasn’t been cashed by the end of the year).

    • Unless you use the accrual method of accounting, but you’ll know if this applies to you. If you don’t know what method you use, follow the instructions above.

# 3 - Prepare financial reports

  • At minimum, your accountant needs a General Ledger

    • This is a fancy way of saying, “a spreadsheet with all of the revenue, expenses, taxes, and owner’s contributions and owner’s draw listed in detail”

  • Ideally, you’ll organize that information into a Profit and Loss Statement (P&L), which is also called an Income Statement (get a free template here)

    • A P&L is a spreadsheet showing your gross revenue at the top (gross = revenue before expenses, taxes, or owner’s pay), then buckets of expenses below that, with the difference being shown as the Profit, or Loss (AKA Net Income).

    • Often included here are taxes paid and owner’s contributions and draw - but these are not deductible expenses (for freelancers, sole proprietors, and LLCs not being taxed as S Corps), and come after the net income line.

    • If you don’t create a P&L, your accountant can do it for you, but they’ll charge you for it.

  • A Balance Sheet is not required to file your federal tax return, but is required for some state tax returns. A balance sheet lists the beginning and ending balances of all your business bank, credit, and merchant accounts for the year. The total change in balances should equal your net income as shown on the P&L. You can get a template for a Balance Sheet here.

  • A Cash Flow Statement is not required for filing taxes for most small businesses, but is often requested by banks when you apply for a loan. It’s also just a good financial statement to have. You can get a template for that here.

If all of that is making your head spin, it might be a good sign that it’s time to hire a bookkeeper. If you can’t afford to do that, or don’t want to for some reason, know that you can definitely do this yourself. It will be much easier if you’ve got separate business and personal checking accounts, so if you don’t, make that switch ASAP! 

And if you’re looking for a bookkeeper, check out my guide on questions to ask them to find a good fit! Asking your friends who have businesses or side hustles is a good way to find someone (Or, you could just hire me! I ❤️ bookkeeping!)