Tax Checklist 2023: What to Know, Do & Prepare for Tax Filing Day

Income taxes never rank high on anyone’s fun list, even if they expect a tax refund. Small business owners find tax preparation exceptionally tedious and take precious time away from their company.

Therefore, efficiency during tax time becomes paramount for business owners who have to prioritize what little time they have and find out estimated tax payments.

A thorough tax prep checklist will help walk business owners through the task of filing their taxes. In addition, following the checklist will give business owners the confidence that everything got completed as expected by governing bodies. 

The complete small business tax preparation checklist

A tax return checklist is a perfect way to start the tax filing process so as not to miss anything. Completing the six items below—preparing for deadlines, understanding the appropriate tax forms, finding income and expense information, sending out IRS information, and asking for extensions where needed—will ease any business owner’s mind. 

1. Prepare for deadlines

April 15th is the date that will most often come to mind when tax deadlines are mentioned. And for many small business owners, April 15th is still the date, though that can change depending on the type of business. 

For example, a small business set up as an S corporation or a partnership has a filing deadline of March 15th. However, sole proprietorships, single-member limited liability companies, and C corporations abide by the April 15th deadline. At the beginning of the year, it’s important to note which deadline to aim for. 

See also: What If I Miss the Tax Deadline for My Tax Return?

2. Understand tax forms

Apart from deadlines, many ask, “What documents do I need to file taxes”? And a good question it is.

The type of forms needed depends on the type of business filing taxes. Individuals are familiar with the income tax return, though business owners may still be left wondering. However, the general idea is that taxes will include a summary page with a high-level review of the taxes getting filed and supporting schedules and attachments that provide further details.

Of course, filing the correct document is paramount:

• Sole proprietorship: 1040 Form with a Schedule C
• C Corporations: Form 1120
• S Corporations: Form 1120-S
• Partnerships: Form 1065, then a Schedule K-1 with individual partner information

Each of these documents generally does the same thing: calculate the estimated tax payments due to the individual or business or to the IRS.

When looking for the forms, one important piece of information is the provider’s tax id number—a necessary piece of data for filing correctly. For those filing the 1040 form, this can be the social security number, but for businesses, it is the TIN.

3. Collect business income records

Of course, no matter the document to get filled out, supporting documentation is important for filing correctly. The IRS will want to know the amount of income from the business, and there are ways they verify that information independently. Companies need to focus on gathering records showing income to provide documentation correctly.

Taxable income can include

• Gross sales
• Mortgage interest
• Rental income
• Royalties
• Dividends interest
• Other income

Acceptable income documents can vary but includes

• Gross receipts from sales of goods or services
• Separate documentation for any refunds or returns
• Documentation to show interest or investment income with the name of the business
  • Other mortgage interest statements
  • Rental income records
  • Recaptured depreciation record

Other documentation

Self-employed individuals might run into certain pitfalls when gathering data to have their own taxes and documentation submitted to the government. The key thing to remember is that a self-employed person running their own business as such might use different information to file rather than strictly business-related data.

Therefore, those who are self-employed need not focus strictly on managing your business expenses but it can include more personal expenses, which include:

• Medical expenses
• Real estate taxes
• Personal property taxes
• Student loan interest
• Property tax

There is plenty more documentation a self-employed individual can provide on their taxes, especially since there are Schedules to ensure all income information is disclosed properly.

See also: Accounting for Property Managers: A 6-Step Guide

4. Collect business expense records

Business expenses are just as important as revenue. Tax breaks, something any tax filer—business or individual—look for the most, are found in those expenses incurred over the tax year. Expenses related to supporting the business are the ones you’ll need to collect when you need to file taxes.

Some of the time, these expenses will need proof to claim certain tax deductions, but all of the time, evidence will need to be readily available in case of an audit. Usually, receipts are sufficient to prove the expense if more information is requested. 

Examples of tax deductions that require further proof are home office deductions, transportation, meals, entertainment, or small business health insurance. Charitable donations also require proof on a tax return as well as dividend income.

Others, such as overhead costs and utilities, don’t require further proof aside from receipts kept in the company records. Business owners should remember to keep and store receipts to show any payments in the hopes of getting a tax refund or more favorable deductions.

Documentation examples

• Receipts
• Invoices
• Credit card statements
• Other charitable organizations’ records
• Account statements

5. Send out appropriate IRS information

Certain information gets reported to the IRS by businesses even outside of the tax season. A good example is W-2 forms for companies with employees since those documents must be mailed out by the end of January. Copies of the form go to the employee and the IRS. Likewise, form 1099-NEC for independent contractors hired by the company also promptly goes to the contractor and the IRS.

Documents companies send to IRS

• W-2 Form
• 1099-NEC
• 1099-MISC
• Social security and medicare tax paperwork
  • Form 941
  • Form 943
  • Form 944
  • Form 945
• Unemployment tax
  • Form 940

Aside from the once-a-year forms such as the W-2, 1099-NEC, or 1099-MISC, other forms are submitted on a quarterly basis throughout the tax year.

6. Keep extensions in mind

Should the need come up, there is no harm in filing with the IRS for an extension on taxes. Keep in mind that filing for an extension has to be completed before taxes are due (March 15th or April 15th; see above), and any taxes owed are paid on time. The extension is only for filing the paperwork rather than putting off any payments. 

The extension is usually granted automatically once the paperwork is filed, though the documents might differ depending on the business entity. Second or subsequent extensions, though possible, could be harder to obtain. 

For sole proprietorships, single-member LLCs, and C corporations, an extension is granted for six months making the new deadline October 15th. Partnerships and S corporations also get a six-month extension, but since their original deadline is in March, the new one becomes September 15th. States might also have their own rules surrounding extensions. 

 See also: Bookkeeping for LLC: Best Practices and FAQs

See also: When Uncle Sam Screws Up: What to Do If the IRS Lost Your Tax Return

Frequently asked questions

In closing

Filing your taxes for the year 2022 is right around the corner. Companies and individuals will start gearing toward filing all of the appropriate paperwork with the IRS as tax prep begins.

Although companies also file taxes, it’s important to remember that deadlines can vary by as much as a month, and the paperwork will also differ. Keeping up during tax time comes down to how well organized a company has its accounting. The IRS will need income and expenses information and documentation to support the numbers that the company has filed. 

The process to file your taxes doesn’t have to cause headaches. Whether you as an individual or business owner get a federal refund or not, local taxes, such as state and federal, are a priority for successful business owners. Following a checklist will help keep you on track as you list all income and expenses.

Don’t worry if you filed your taxes twice, we got an article just for that: Filing Duplicate Tax Returns? Here’s What to Know and Do

Agata Kaczmarek has held a passion for writing since early childhood. A professional writer for many years, Agata specializes in writing articles and blogs focused on finance as someone who holds a Masters Degree in Accounting and Finance.

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