Preparing for your tax return can be a daunting prospect. 

Information from all across the business needs to be gathered and analyzed to make certain that the taxes paid are accurate and on time

This is why we have put together the business tax preparation checklist

Working through this list will provide you with a simple process to retrieve all the necessary documents and information for compiling your tax return. 

As you go through, check off each set of materials once you have recovered and reviewed them. You can then pass this information on to your tax advisor using the final form field provided, making the process easier for everyone.

The information listed in this checklist covers all necessary materials for the submission of both Form 1120 and Form 1065 - covering both corporation and partnership structures.

Let's get going!

First step:

Record tax advisor/accountant contact details

Record the contact details of the individual who is responsible for reviewing and delivering final tax documentation to the IRS. This will enable you to easily contact them via email upon completion of the checklist. 

Tax advisor/accountant contact details

Analysis of current and past financial data:

Collect copies of federal and state tax returns

Federal and state tax returns should be examined in order to determine the accuracy of taxes paid.

Reviewing previous documents is an effective way to refamiliarise yourself with the process and materials required to complete a tax return.

You should have these filed appropriately as records of your company's previous payments.

Consult copies of articles of incorporation

Articles of partnership/incorporation should be reviewed in order to determine the appropriate tax rates.

These are key documents for any business and will show clarify how your company is structured. Your company may be an LLC, an s-corp, or a c-corp if registered in the United States, for instance. 

If your business operates as a corporation you will likely have to pay corporate tax. The tax rate varies depending on how much money your company makes.

Whereas, if your business has a joint partnership structure or is an s-corp the shareholders of the business pay tax personally on the dividends they receive.

Calculate year end balance sheets

Year-end balance sheets should be examined in order to determine the applicable taxes to be paid. 

The balance sheet provides a breakdown of assets, liabilities, and shareholders equity. 

To create your balance sheet, you can use our balance sheet statement preparation checklist.

Use the form field below to upload a copy of your balance sheet.

Review year-end bank statements

Year-end bank statements should be checked to verify applicable taxes to be paid.

It is important to double check these documents to be sure all financial activity is accounted for and accurate.

Review gross receipts from sales or services

Gross receipts from sales or services should be analyzed in order to determine appropriate taxes to be paid.

You can review your monthly income statements, sometimes called profit and loss statements, for these figures. 

Use our Income (profit and loss) statement process to see how these procedures are structured.

Use the form field to record your gross receipts or sales. You will use this figure for the first entry field in your tax return.

Check sales records (for accrual based taxpayers)

Sales records are sales invoices with details such as:

  • the item purchased 
  • the date when the item was purchased 
  • the selling price 
  • the company who sold the item 
  • the customer who bought it
  • related contact information

Consult these sales records to ensure all details correspond with the other materials gathered.

Calculate total returns and allowances

Returns and allowances from year-end income statements should be taken into account in preparing tax returns.

The returns and allowances section reports the commodities returned by the customer and the allowances granted to a customer due to improper or defective merchandise.

Returns and allowances are declared on item 1b of the IRS Form 1120 which you will use to file your return. The total figure given is deducted from the gross sales receipts you gathered in task 7.

Gather business checking/savings account interest

Consult your bank interest built across the year to find the total amount of interest earned. This should have been reported in your general ledger.

Use Form 1099-INT to submit this material. You can find the instructions for filing this particular form on the IRS' website.

Identify other income

Other income should be checked to verify appropriate taxes to be charged.

Other income is defined as reported earnings from business activities outside of core business operations.

Use the sub-checklist below to tick off applicable examples:

  • 1
    Interest income from notes receivables
  • 2
    Dividends and interest income from long-term investments
  • 3
    Net earnings from the sales of assets other than inventory
  • 4
    Net earnings from sales of scrap items
  • 5
    Gain on foreign currency exchange
  • 6
    Miscellaneous rent income

Personal identification of owners:

List all business owners' details

Business owner information including full names, social security numbers, and home and business addresses, should be submitted when filing certain business taxes.

Note the identification number of the business

Your company's identification number for tax purposes is the Employer Identification Number is a 9 digit number issued by the IRS.

This number allows a US business to pay its federal taxes. Make sure you have this number available when filling out your tax returns. 

Note your EIN in the form field below.

Benefits, loans and transactions documents:

Compile details of fringe benefits

There are a range of deductibles and tax credits which your company may or may not be eligible for. 

Gather any materials related to the fringe benefits your company offers in case they can prove beneficial for tax purposes.

These items include employer-paid pension/profit sharing contributions, employer paid HSA contributions, employer-paid health insurance premiums and cost of other fringe benefits.

Gather documents of business loans

Loan schedules and agreements should be examined to determine the appropriate taxes.

Gather records of all business insurance

  • General Liability Insurance: This includes the protection against risks as the result of bodily injury, property damage, medical expenses, libel, slander, the cost of defending lawsuits, and the like
  • Product Liability Insurance:  This includes financial loss as a result of a defective product that causes injury or bodily harm. 
  • Professional Liability Insurance: It is the protection of the business against malpractice, errors, and negligence in the provision of services to your customers.
  • Commercial Property Insurance: It is the  protection of  the business against the loss and damage of company properties due to a wide-variety of hazards such as fire, smoke, wind and hail storms, civil disobedience and vandalism. 

Locate information on interest expenses

For businesses, interest expense can be a tax deductible item because it is a large part of the costs of doing business just like other overhead costs, provided, however, that it can be shown that the loan was necessary for the business.

Payroll data:

Collect payroll forms

 Gather a record of all payroll forms including reviewing Form 1099 for any contracted work.

List commissions paid to subcontractors

Commissions paid to subcontractors are subjected to applicable tax rates.

Collect information for your tax advisor on any commissions you have paid.

Record wages paid to employees

Gather information on all wages paid to the employees working within your business.

Wages paid to employees (forms W2 and W3)  and the federal and state payroll returns (Form 940, etc.) will need to be filed as part of your tax return.

Expense details:

Collate all advertising costs

Record your total advertising spending for the year. 

Use the form field below to note the amount.

Document all transportation and travel expenses

Record local transportation costs such as business trip (mileage) logs and receipts for public transportation, parking and tolls.

Include information on travel away from home such as:

  • Airfare or mileage
  • Accommodation expenses
  • Meals, tips
  • Taxi, tips
  • Internet connection (hotel, Internet café etc.)
  • Others

 This also includes repair bills and lease information.

Record office supply expenses

This includes pens, paper, staples, and other small costs. It also includes spending on computers, printers, and other more expensive office related equipment.

Record rental expenses

Include spending on office space rent, business-use vehicles, and renting costs of any specialist equipment.

Record the total rental costs in the form field below.

List any other expenses

Include details of any further expenses not covered by the previous categories.

This could be costs of repairs, maintenance of office facility, or other business related expenses.

List of assets and depreciation:

Disclose asset acquisitions

Itemize the total costs of any assets acquired over the taxable period.

This includes:

  • The initial cost of the asset (including any paid sales tax)
  • Description of the asset
  • Date put into service
  • The amount of time the asset is used for the business (versus for personal use) stated as a percentage of total utilization.

Work out your depreciation expense schedules

To assess the total value of assets held, the asset values need to account for depreciation

The accumulated depreciation is a contra account, which means that it acts as a deduction from the original value of the asset. 

When you calculate your figures, you should include:

  • The description of the asset
  • Date put into service
  • The original cost of the asset
  • Accumulated depreciation up to this tax year
  • Business use percentage (if applicable)
  • The recovery period of the asset (3 years, 5 years, 7 years, etc.)
  • Any Section 179 Expense (or first-year expense) taken in the first year of service

See the image above as an example

Document details of asset dispositions

Record the details of any asset dispositions. This normally refers to a direct sale of an asset the company held.

Record this information including:

  • The description of the asset
  • Date of sale
  • The sales price of the asset
  • Any expenses of the sale
  • Accumulated depreciation

IRS correspondence:

Find any communications with the IRS

Exchange of printed official communications between the taxpayer and the IRS should be compiled as part of your documentation.

Compile and deliver the documentation:

Compile all documentation

Provide instructions and/or a URL to the compiled documentation relevant to your business taxes, using the form fields in this task.

Using the Members form field below, assign the individual who will approve the compiled documentation.

Approval: Compiled business tax documentation

Will be submitted for approval:
  • Compile all documentation
    Will be submitted

Schedule meeting with your tax advisor/accountant

Once all materials have been gathered, you can begin to go through the different forms your company needs to complete. 

Organize all your documentation so that it can be easily understood and use the email widget below to arrange a meeting with a tax consultant to go through the filing process with you.


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