Business Tax Preparation

A complete and accurate business tax return is more than a compliance requirement. It’s a safeguard against IRS (Internal Revenue Service) penalties, unexpected tax liabilities, and financial disruptions that often result from incomplete or disorganized records.

When tax prep is rushed or neglected, even minor errors can quickly escalate into serious issues. These may include delayed refunds, challenges with tax credit eligibility, or red flags that draw unwanted IRS scrutiny.

With the right preparation in place, you can file with confidence. A well-prepared return supports compliance, reduces risk, and positions your business for a more stable and predictable tax year—whether you’re filing for the first time or managing ongoing reporting obligations.

What Tax Documents Do You Need for Business? Critical Items Your Tax Preparer Needs From You

Before your CPA (certified public accountant) or tax professional can prepare your business tax return or offer tax advice, they need a clear, complete view of your company’s financial activity for the tax year.

Missing or incomplete records slow the process, increase the risk of errors, and can lead to inaccurate income tax reporting. Over time, these issues may expose your business to avoidable IRS questions, delayed filings, or unexpected tax liabilities.

At a minimum, your preparer will need documentation that verifies your income, expenses, assets, and any significant changes during the year, including ownership or structural changes. These records form the foundation of an accurate and defensible tax return.

To compile this information, your tax preparer may use accounting software exports, bookkeeping reports, bank and credit card statements, prior-year disclosures, and formal business documents. 

Together, these materials allow them to confirm figures, apply the correct tax treatment, and ensure compliance with IRS requirements.

Providing these items upfront enables your preparer to e-file your income tax return efficiently and helps prevent unnecessary delays during tax season.

In the sections that follow, we’ll break down exactly what documents you should gather based on your entity type and explain why each item matters for accurate business tax preparation.

General Checklist and Self-Employed

For self-employed individuals and sole proprietors, organized documentation is the backbone of accurate business tax preparation.

The IRS evaluates your tax situation based on clear evidence of revenue and expenses. Because of this, your preparer relies on complete and well-maintained financial records to calculate taxable income, confirm deductions, and ensure full compliance with current tax laws.

Income Items

Your income records form the foundation of your tax return.

For self-employed taxpayers, income often comes from multiple sources, including deposits, transfers, platform payouts, and third-party transactions. Because of this complexity, your tax preparer must reconcile every income stream to determine your true gross income for the tax year.

Accurate income reporting helps avoid IRS notices, prevents mismatches with reported Form 1099s (non-employment payment records), and ensures your federal tax and state tax filings remain consistent and compliant.

Bank Statements

Bank statements are a primary verification tool for income activity. They enable tax professionals to confirm deposits, identify business revenue streams, and reconcile transactions against your bookkeeping or accounting software.

Providing complete monthly statements for the entire tax year helps your preparer verify:

• Business income deposits
• Refunds or account adjustments
• Transfers between accounts
• Any discrepancies that need additional explanation or disclosures

Credit Card Statements

Credit card statements provide clear visibility into both income-related transactions and deductible business expenses.

For self-employed taxpayers, these records are essential for separating business charges from personal spending—an essential step in maintaining compliance and supporting legitimate deductions.

These statements also enable your CPA to:

• Identify valid business purchases
• Track recurring business costs
• Verify expenses recorded in tax software or bookkeeping systems
• Match expenditures with supporting receipts and invoices

Costs of Goods Sold

If your business manufactures products, resells inventory, or provides services tied to physical goods, your tax professional will need complete documentation of your Cost of Goods Sold (COGS).

This information directly affects your taxable income, and the IRS scrutinizes it closely to ensure the amounts claimed align with inventory levels, purchase activity, and year-end adjustments.

Details of Asset Dispositions

If your business sold, traded, or disposed of assets during the tax year, your preparer will need clear documentation that outlines:

• The date the asset was acquired or placed into service
• The date it was sold or disposed of
• The sale proceeds or fair market value at disposition
• Any associated selling or disposal costs

This information enables your CPA to calculate gains or losses, update depreciation schedules, and accurately report the transaction in compliance with IRS requirements.

Expenses

Business expenses play a critical role in reducing taxable income and must be supported by clear, well-organized documentation.

Your tax professional relies on these records to properly classify deductions correctly, substantiate claims to the IRS, and ensure compliance with federal and state tax requirements.

Details of Asset Purchases

Major equipment, vehicles, technology, and other capital assets must be reported separately from ordinary business expenses.

Your preparer will need:

• Purchase invoices or receipts
• Financing or loan documents (if applicable)
• The date each asset was placed in service
• Records of any trade-ins or exchanges
• Business-use percentage

These details determine whether the asset qualifies for depreciation, Section 179 expensing (current-year business deductions), or bonus depreciation—each of which can directly affect your current-year tax obligation.

Vehicle Information

If you use a vehicle for business purposes, the IRS requires substantial documentation to support any related deduction.

To ensure accuracy and compliance, your preparer will request:

• Total miles driven and business miles driven for the year
• Mileage logs or mileage-tracking reports
• Lease or loan statements
• Actual expense records if not using the standard mileage rate
• Business-use percentage of the vehicle

Depreciation Schedules

Depreciation schedules reflect the long-term assets your business owns, the depreciation method used, and the remaining basis for each item.

Your tax professional relies on these schedules to:

• Update current-year depreciation accurately
• Verify prior-year depreciation calculations
• Report new assets and remove those that were disposed of
• Ensure alignment with IRS depreciation tables and tax laws

Advance Payment Notices

If your business made advance or estimated tax payments during the tax year, your tax preparer will need copies of all related notices and confirmations.

These records allow your CPA or tax professional to properly apply payments toward your federal and state tax obligations and help prevent overpayments, underpayments, or mismatches in IRS records.

Advance payment documentation may include quarterly estimated tax vouchers, IRS and state payment confirmations, payroll tax deposit records, and any notices received from taxing authorities.

Payroll Reports

For businesses with employees, payroll reports are essential to accurate tax filing and ongoing compliance. Your tax preparer relies on these reports to verify wages, withholdings, and employer-paid taxes throughout the year.

Required payroll documentation typically includes:

• Quarterly payroll reports
• Year-end summaries
• Forms W-2 (Wage and Tax Statement) and W-3 (Transmittal of Wage and Tax Statements)
• Forms 941 (Employer’s Quarterly Federal Tax Return) and 940 (Employer’s Annual Federal Unemployment Tax Return)
• Payroll tax payment confirmations

Tasks That Should Be Completed

Before tax refund preparation begins, certain housekeeping tasks should be finalized.

Completing these steps allows your tax professional to work with clean, reliable data and minimizes the need for revisions or follow-up requests.

These tasks typically include:

• Reconciling bank and credit card accounts
• Closing bookkeeping records for the tax year
• Reviewing income and expense classifications
• Verifying asset additions and dispositions
• Confirming payroll totals

Other Items

In addition to financial records, your preparer may request formal business documents that define your entity structure and document prior filings.

These materials help ensure your tax return aligns with your legal structure and operational history.

Last Year’s Business Tax Return

Your prior-year business tax return provides critical context for current-year reporting.

It allows your CPA to confirm carryforwards, depreciation schedules, ownership details, and consistency across filings.

Articles of Incorporation

For corporations and limited-liability companies (LLCs), Articles of Incorporation (or Organization) confirm your legal entity, formation date, and ownership structure.

These documents are often required to confirm filing requirements and support disclosures on your federal tax return.

Partnership Agreement

If your business operates as a partnership, the partnership agreement outlines ownership percentages, profit and loss allocations, and capital contributions.

Your tax professional uses this information to prepare accurate partner reporting and ensure compliance with IRS partnership regulations.

Accounting Records

Complete accounting records form the backbone of professional tax preparation. These records include general ledgers, trial balances, bookkeeping reports, and exports from accounting software.

Partnerships—Form 1065

Partnerships are required to file Form 1065 (U.S. Return of Partnership Income) to report the business’ income, deductions, credits, and overall financial activity to the IRS.

While the partnership itself doesn’t pay income tax, the information reported on this return determines how income and losses flow through to each partner.

Because of this pass-through structure, accuracy and consistency are critical, as errors can affect not only the partnership but also each individual partner’s tax return.

Documents

Your CPA or tax preparer relies on these documents to prepare an accurate partnership return and supporting schedules:

• Year-end profit and loss statement and balance sheet
• Bank and credit card statements covering the entire tax year
• Cost of goods sold documentation (if applicable)
• Depreciation schedules and details for asset purchase or disposition 
• Payroll reports and payroll tax filings, if the partnership has employees
• Records of estimated or advance tax payments made during the year
• Prior-year Form 1065 and all related schedules

Partner Information

Because partnership income passes through to individual partners, accurate and up-to-date partner information is essential.

Your preparer will need current and complete details for each partner, including:

• Legal name and contact information
• Taxpayer identification number
• Ownership percentage
• Capital contributions and distributions
• Profit and loss allocation terms
• Any changes in ownership during the tax year

S Corporations—Form 1120s

S corporations must file Form 1120-S (U.S. Income Tax Return for an S Corporation) to report the company’s income, deductions, credits, and other financial activity to the IRS.

Although income generally passes through to shareholders, the filing requirements are strict, and inaccuracies can lead to IRS notices, amended returns, or shareholder-level reporting issues.

Documents

Your CPA or tax preparer will typically request the following documents to prepare an accurate S corporation return:

• Year-end profit and loss statement and balance sheet
• Bank and credit card statements for the full tax year
• Payroll reports, including Forms W-2, W-3, 941, and 940
• Shareholder wage records and payroll tax payment confirmations
• Depreciation schedules and details for asset purchase or dispositions 
• Cost of goods sold documentation, if applicable
• Records of estimated or advance tax payments made during the year
• Prior-year Form 1120-S and all supporting schedules

Shareholder Information

Accurate shareholder data is essential for preparing Schedule K-1s and ensuring income, losses, and credits are reported correctly. Your preparer will need the following information for each shareholder:

• Legal name and contact information for each shareholder
• Taxpayer identification numbers, Social Security Number (SSN) or Employer Identification Number (EIN), as applicable
• Ownership percentages
• Capital contributions and distributions
• Any changes in ownership during the tax year

C Corporations—Form 1120

C corporations file Form 1120 to report corporate income, deductions, credits, and overall tax liability.

Unlike pass-through entities, C corporations are subject to corporate income tax, which makes accuracy especially important for managing federal tax exposure and maintaining compliance with IRS requirements.

Form 1120 preparation often involves more complex disclosures, particularly for businesses with retained earnings, multiple shareholders, or significant asset activity.

Documents and Other Information

To prepare Form 1120 accurately, your tax professional will typically require the following:

• Year-end profit and loss statement and balance sheet
• Detailed income and expense records for the full tax year
• Bank and credit card statements covering the full tax year
• Depreciation schedules and details for asset purchase or dispositions
• Payroll reports and payroll tax filings, if applicable
• Records of dividends paid or declared during the tax year
• Confirmations of estimated federal and state tax payments
• Prior-year Form 1120 and all related schedules

Shareholder Information

Even though C corporations pay their own income tax, shareholder information remains important for accurate ownership reporting, dividend tracking, and ongoing compliance.

Your preparer may request the following shareholder information:

• Legal names and contact information of all shareholders
• Ownership percentages for each shareholder
• Any changes in ownership or capital structure during the tax year
• Records of dividends paid or declared during the tax year

Additional Items for Your Business Checklist

Beyond core financial records, there are additional considerations that can directly affect the accuracy of your business tax return.

Overlooking these items can lead to filing delays, missed obligations, or unresolved issues that carry over into future tax years.

Reviewing this checklist helps ensure your business tax preparation is complete, consistent, and aligned with current IRS and state tax requirements.

Make Sure You’ve Completed All Related Tax Issues

Before your tax return is finalized, confirm that all related tax matters have been addressed, including:

• Filing and remitting applicable sales tax
• Reconciling payroll tax filings and payroll tax deposits
• Reviewing and addressing any use tax obligations
• Addressing any IRS or state tax notices received during the year
• Verifying tax credits or carryforwards from prior years
• Confirming entity elections and required compliance filings

How Much Does It Cost to Have Someone Do Your Business Taxes?

The cost of professional tax preparation services varies based on the complexity of your business, the number of tax forms required, and whether you work with a dedicated tax accountant or a professional accounting service firm.

Simple returns for self-employed individuals or small businesses with minimal activity generally cost less.

By contrast, partnerships and corporations with multiple schedules, payroll obligations, or asset reporting require more time and specialized expertise.

While professional tax preparation may represent an upfront expense, it often delivers long-term value by maximizing allowable deductions and tax credits, reducing the risk of IRS penalties, and helping ensure your business remains fully compliant.

What Is the Business Tax Filing Deadline?

Business tax filing deadlines depend on your entity type and overall tax structure.

Most partnerships and S corporations must file their federal tax returns by March 15, while sole proprietors and C corporations typically follow the April 15 deadline.

Extensions may be available, but they apply only to filing, not to the payment of taxes owed. Meeting filing deadlines is critical to avoiding penalties, interest, and unnecessary attention from the IRS.

Preparing early and working closely with your tax expert helps ensure your return is submitted accurately and on time, even during peak tax season.

Best Practices for Managing Business Taxes

Effective business tax preparation is built on consistency and planning—not last-minute filing.

Following these best practices helps reduce risk, maintain compliance, and improve efficiency when working with your CPA or tax professional.

Gather Necessary Information

Keep income, expense, payroll, asset, and prior-year tax records organized throughout the year. Complete documentation allows for faster, more accurate tax return preparation.

Claim All Income That Is Reported to the IRS

Ensure all income reported to the IRS, such as 1099s and payroll records, is included on your tax return. Reconciling income early helps avoid notices and penalties.

Keep Adequate Records

Maintain clear bookkeeping records, receipts, and accounting software reports. Proper documentation supports deductions and simplifies compliance if questions arise.

Separate Business From Personal Expenses

Use dedicated bank accounts and credit cards for business activity. Clear separation reduces errors and supports accurate expense classification.

Understand the Difference Between Net and Gross Income

Gross income reflects total revenue, while net income shows profit after expenses. Understanding both is essential for managing tax liability and overall financial performance.

Correctly Classify Your Business

Your entity type determines filing requirements and tax treatment. Proper classification helps ensure compliance with current tax laws.

Manage Payroll

Accurate payroll records and timely filings are critical. Regular reconciliation helps prevent costly payroll tax issues.

Seek Your Accountant’s Advice on Your Business Plan

Involving your accountant in major decisions provides you with legal advice and helps you understand tax implications before they impact your return.

Take Advantage of Capitalization Rules

Properly capitalizing and depreciating assets can improve cash flow and ensure deductions are applied correctly.

Strong tax practices don’t just make filing easier—they support better financial decisions year-round. Consistent planning and informed oversight help ensure your business remains compliant, financially efficient, and prepared for long-term growth.