SMALL BUSINESS OWNERS: What You Should Include in Your Tax Preparation Checklist?

Tax filing can be a real headache if you’re a small business owner with a hectic management schedule and busy day-to-day operations. You have to figure out which forms to use, gather your financial records, and keep track of your deadlines while continuously running your business.

Moreover, it’s a meticulous process that requires your full attention. One small mistake in your filings could lead to costly penalties and even an IRS audit, which is why tax preparation is important.

Tax prep refers to gathering and organizing documents ahead of your tax deadlines. It’s the primary strategy business owners use to ensure they stay on top of their obligations.

We recommend you create your own small business tax preparation checklist to simplify the process. The list should include key financial documents, tax forms, and other information you’ll need, which we’ll discuss below.

Read on to learn how to create your tax preparer’s cheat sheet.

Six Things to Include in Your Small Business Tax Preparation Checklist

A comprehensive small business tax preparation checklist should include the following:

Personal Information

No matter which tax form you file, you must provide your personal and business information. This includes:

• Taxpayer Identification Number (TIN): Depending on your business’s structure, this could be your Social Security Number (SSN) or your Employer Identification Number (EIN).
• Legal Business Name & Structure: Your business’s registered name and legal structure. If applicable, your “Doing Business As” name.
• Previous Year’s Tax Returns: Last year’s filings.

Financial Documentation

You must prepare two types of financial documentation: income and expense. Income documentation reports your earnings and may include:

• Gross receipts, sales records, or invoices.
• 1099 Forms for various sources of income, such as rental income and savings or investment income.
• K-1 Forms for income generated through partnerships, S corporations, and similar legal entities.
• Royalties and licensing fees.
• Bank statements for business-related deposits.

Conversely, expense documentation outlines your deductible expenses, such as:

• Lease agreements and utility bills.
• Payroll records (e.g., W-2s and 1099s).
• Receipts for purchases like office supplies, machinery, equipment, and software.
• Receipts for business-related travel expenses (e.g., airfare, lodging, and meals).
• Records of charitable donations.
• Invoices for advertising or marketing expenses.
• Invoices for professional fees or payments to lawyers, accountants, and consultants.

Gathering these documents in advance will help you streamline your tax filings.

Tax Forms

Different business entities use different forms for reporting their taxes. Here’s a quick breakdown of which tax forms apply to which entities:

• Form 1040 Schedule C: Sole proprietors and single-member LLCs must use this form to file their taxes.
• Form 1065: Business owners in partnerships must submit this form alongside their personal income tax return.
• Form 1120: Businesses structured as C corporations must use this form to report their annual income.
• Form 1120-S: Businesses structured as S corporations must use this form to report their annual income.

If your business has employees or has hired contractors in the past year, you may need to prepare one of these income forms:

• W-2 Forms: Reports wages, tips, and other compensation you’ve paid your employees.
• Schedule K-1
• Forms 1099-MISC: Enumerates miscellaneous income, such as rental income, prizes, and other payments not covered by other 1099 forms.
• Form 1099-NEC: Outlines payments your business has made to independent contractors or freelancers for services worth $600 or more.
• Form 1099-DIV: Reports dividends your business made from investments and similar distributions from stocks or mutual funds.
• Form 1099-INT: Any interest income worth over $10 your business made from bank accounts or bonds must be reported in this form.
• Form 1099-B: Any capital gains or losses your business made from selling securities and other investments must be reported in this form.

All these forms come with an instruction packet and can be found on the official IRS website.

Quarterly Estimated Tax Payments

Freelancers, independent contractors, and other self-employed workers are required to make quarterly estimated payments on the following dates:

• January 15, 2025: 2024 Fourth Quarter Estimated Taxes Deadline.
• April 14, 2025: 2025 First Quarter Estimated Taxes Deadline.
• June 16, 2025: 2025 Second Quarter Estimated Taxes Deadline.
• September 15, 2025: 2025 Third Quarter Estimated Taxes Deadline.
• January 15, 2026: 2025 Fourth Quarter Estimated Taxes Deadline.

Since the IRS considers small business owners self-employed, you must include these dates in your tax preparation checklist. Note that if the date listed above falls on a weekend or a holiday, the deadline will be moved to the next business day.

Tax Deductions & Credits

Your checklist must also include all the tax deductions and credits you can claim.

Some of the most common deductions small businesses claim are:

• Advertising and promotion
• Business meals.
• Business Insurance
• Business-related travel expenses.
• Depreciation.
• Employee wages and benefits
• Home office expenses.
• Legal and professional fees.
• Rental payments and other utilities.

Deadlines

Lastly, your small business tax preparation checklist should include this year’s tax deadlines:

• January 31, 2025: Deadline for submission of W-2 forms to employees and Form 1099s to independent contractors.
• February 28, 2025: Deadline of submission for Form 1099 or Form 1096 returns.
• March 15, 2025: Yearly tax return submission deadline for partnerships, S-corps, and multi-member LLCs.
• March 15, 2025: Deadline for requesting extended filing for partnerships, S-corps, and multi-member LLCs.
• April 15, 2025: Yearly tax return submission deadline for sole proprietorships, C-corporations, and single-member LLCs.
• September 15, 2025: Deadline for partnerships, S corporations, and multi-member LLCs that received extensions on their filings.
• October 15, 2025: Deadline for sole proprietorships, C-corporations, and single-member LLCs that received extensions on their filings.

Once you’ve completed your checklist, we recommend printing it out so you can easily refer to it when tax season approaches. It would also be helpful to update the list periodically. Tax laws change frequently, so you must ensure your checklist is updated.

Tackle the Tax Season with Confidence

A comprehensive tax preparation checklist is the key to a stress-free, smooth tax filing. By listing all the documents and tax forms you need, you can streamline your processes and focus your energy on what matters most: growing your business.

If you need help preparing your tax filings, NCH is here to assist you.

NCH specializes in tax preparation. Our expert tax preparers will help you organize your filings and ensure they’re accurate. To learn more about our tax prep services, visit our website here or call us at 1-800-508-1729.

DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.