Tax SeasonMay 10, 20266 min read

How to Prepare Your Books for Tax Season

A tax-season bookkeeping checklist for reconciling accounts, reviewing payroll and sales tax, cleaning up transactions, and sending clean reports to your tax preparer.

Short answer

Prepare books for tax season by reconciling bank and credit card accounts, reviewing uncategorized transactions, loans, payroll, sales tax, owner activity, 1099 vendor information, and sending clean P&L and balance sheet reports to your tax preparer.

Checklist

Reconcile all bank accounts.
Reconcile all credit cards.
Review uncategorized transactions.
Review owner draws and contributions.
Review loan balances and interest.
Review payroll and sales tax records.
Collect 1099 vendor information.
Run a P&L and balance sheet.
Send clean reports to the tax preparer.

Common mistakes

Sending unreconciled reports to the accountant.
Leaving Ask My Accountant or uncategorized balances unresolved.
Recording loan proceeds as income.
Treating owner draws as operating expenses.
Forgetting vendor W-9 or 1099 details until the deadline is close.

Examples for service businesses

A landscaping company should review equipment, fuel, payroll, materials, and sales tax before tax time.
A contractor should confirm subcontractor payments and job deposits are recorded correctly.
A service business should make sure credit card payments were not counted as new expenses.

Clean reports are the goal

Tax preparers need organized records and reports that tie back to real accounts. The IRS recordkeeping guidance emphasizes clear income and expense records that support tax return items.