How to Prepare Your Books for Tax Season: The US Business Checklist

The universal checklist

Reconcile everything to December 31 (or your fiscal year-end): every bank, card, loan, and processor account tied to its closing statement. Then clear the junk drawers, uncategorized transactions, undeposited funds, and clearing accounts should be zero or documented.

Tie payroll to the provider's annual reports: gross wages, employer taxes, and liabilities in the ledger should match W-2/annual filings to the dollar. Document fixed-asset purchases and disposals with invoices, and confirm loan balances against lender statements so interest and principal split correctly.

US-specific steps

S-corps and C-corps need extra schedules: officer compensation support, shareholder distributions and basis tracking, and a balance sheet (Schedule L) that ties to the books. Verify 1099 vendor records are complete with W-9s before the January deadline, and reconcile sales tax filed during the year to the liability account.

The single highest-leverage move: send your CPA a reconciled trial balance with documented adjusting entries. Files that arrive clean get filed faster and billed lower.

State-level steps

Reconcile state sales tax filed during the year to the liability accounts in the ledger, differences need explaining before filing, not after. States with franchise or margin taxes (Texas, Delaware, California's minimums) need the balance sheet and revenue records those computations draw from.

Multi-state businesses should verify activity is tracked by state: payroll withholding by work location, sales by destination, and any apportionment inputs your preparer will request.

Behind on books with a deadline coming?

Prioritize ruthlessly: reconcile the accounts that feed the return first, get a fixed-scope cleanup quote immediately, and tell your preparer early, extensions exist precisely for this. A rushed return built on unreconciled books costs more in the long run than a clean extension.