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2019 Tax Preparation Checklist For Small Business & Personal Tax Returns

December 15, 2018
Taxes

Good financial reporting is essential to help businesses avoid audits.  The two primary financial statements needed will be the balance sheet and income statement.  The balance sheet enables you to determine your company’s net worth by listing all your assets, liabilities and the equity you have in the company.  The income statement shows the company’s income and expenses, and it calculates your net income or loss.  

Verify your figures:

The balance sheet shows you the assets (property owned by the business), liabilities (debt obligation of the business) and your equity (your business assets less all debt)

  • Verify balance sheet accounts are reconciled.  Make sure that your income and expenses match official bank statements, use the reconciliation discrepancy report to troubleshoot accounts that don’t add up
  • Match bank account (checking, savings and credit card) statements to balance sheet balances
  • Match loan statements to balance sheet balances ensuring interest is an expense and loan payment decrease the liability


The income statement captures all business income and expenses providing you with your net income

  • Look for all business expenses paid with personal funds- you want to make sure and account for all business expenses possible as this could lower your tax liability
  • Make sure all personal expenses paid from the business are properly recorded – if the IRS suspects that your small business deductions are personal expenses, you are in danger of an IRS audit.
  • Make sure that expenses have been categorized accordingly. Use the reclassify transaction tool to clean up any misclassified transactions, also check for uncategorized expenses. For example, coffee purchased for office use could be an office expense and coffee with a client goes to Meals subject to only a 50% deduction in your tax return.


Total Cost of Goods Sold for the year

  • Review your inventory and make necessary adjustments

Payroll Summary report ensures that your tax liabilities match your quarterly payroll returns.

Mileage Log – make sure is up to date, note that this is one of the first areas looked at by the IRS when audited. You want to make a note of all your driven miles for business and personal use, don’t forget extra expenses for parking and tolls.

Fixed Assets is property used long-term such as vehicles, equipment, machinery, and buildings used in the production of income which gradually loses value over time.  This decrease in value is called depreciation.

Make sure assets are correctly recorded, new acquisitions as well as dispositions. Keep records that show:

  • When and how assets were acquired
  • Purchase price, cost of any improvements
  • Section 179 deduction taken
  • Deductions are taken for depreciation
  • Deductions are taken for casualty losses (such as losses from fire or storms
  • When and how you disposed of an asset
  • Selling price
  • Expenses of sale

Note any changes in ownership.  Make sure to have up to date information to create correct K-1’s for all owners.

Verify employee and vendor information as it must be correct to issue W-2’s and 1099-MISC forms due by January 31st

Last year’s Federal and State Tax Returns


In addition to the above list, Schedule-C filers need their personal information too…

Sole Proprietors tend to use a home office; there are two basic requirements: regular and exclusive use of the area and must be the principal place of business. The deduction is based on the percentage of your home devoted to business use only; below is a list of items you will need to help you figure out that amount.

  • Square footage of living area of the home
  • Square footage of office space
  • Utilities
  • Repairs to the office area
  • Homeowner’s insurance
  • Home mortgage interest
  • Property taxes


Personal records: full legal names, Social Security number and date of birth for every person included in your tax return, driver license for primary taxpayer and spouse

Income records:  1099-MISC forms, W-2’s, K-1’s, interest, dividends income, sale of stock Form 1099-B

Rental income and expenses (cost, date placed in service- for depreciation calculation)

Estimated tax payments made for Federal and State taxes

IRA Contribution information Form 5498

Charitable Contributions made by your business and personal, don’t forget to add mileage driven for voluntary work and anything over $250 value needs a receipt.

Health Care Expenses that exceed 7.5% of Adjusted Gross Income don’t forget to include mileage driven to doctor appointments

Health insurance coverage Form 1095 or ECN (exemption certificate number) provided by the marketplace for each member in your household if they qualify

Education expenses, paid tuition Form 1098-T and student loan interest paid Form 1098-E.  List of itemized qualified educational expenses and records of any scholarships received

Child and Dependent Care Expenses to include name, address, Tax ID or SSN of the provide

Energy-efficient home improvements may be deductible, bring in your receipts.

This list is not all-inclusive, but it will give you a good idea of the documentation to review and provide to file your taxes correctly.






Yesenia Brown

Yesenia is a tax accountant at Ragain Financial. She has been preparing taxes for 15 years.  In her free time, she enjoys spending time with her family. She is a second-degree Tae Kwon Do black belt and recently has discover the love for yoga.


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