No one likes doing their taxes, but for business owners, it’s especially important to be organized come tax time. There are a lot of documents that business owners need in order to be prepared, and if even one is missing, it can create a headache come April. So what documents do business owners need?

We’ve created this handy checklist that will help to ensure you have all the right documents in order to maximize your deductions and avoid penalties. 

What Documents Do I Need For Tax Preparation?

1. Proof Of Income 

Depending on the type of business you own, proof of income documentation can take many different forms, a few of the most common include bank statements showing revenue, payroll records, and 1099 forms from contractors. 

2. Expense Tracking

As a business owner, it’s critical that you keep track of all your expenses. This includes everything from office supplies to travel costs, inventory purchases, payroll, and operating costs. Don’t forget to retain a copy of all relevant receipts and invoices!

expense tracking

There may be cases where you know you had the expense, but you simply forgot to get a receipt. You can cry foul, but time and again the IRS has had tax courts uphold their elimination of a taxpayer’s deduction for lack of contemporaneous documentation. Here are some areas where the term contemporaneous is especially important:

  • Charitable contributions
  • Business deductions for expenses and capital purchases
  • Mileage logs
  • Tip records
  • Business travel expenses

What you need to know about tracking expenses: 

  • Always get a receipt. Before you leave a donated item, always ask for a receipt. In the case of a vehicle, make sure the charitable organization gives you a 1098-C that is fully filled out. In addition, make sure the organization uses your vehicle or is a qualified charitable group that allows you to take the full market value of your donation.
  • If you forget, call right away. As soon as you realize a confirmation or receipt is missing, call to get one sent to you. Request that the receipt be dated as of the date of the service or activity.
  • Think tax year. Understanding the definition of contemporaneous is important, because it is not always precisely defined. If the documentation is received in the same year as the donation or transaction, you are usually in good shape.
  • Keep a log. Many transactions require the correct documentation at the time the activity occurs. This is true with deductible mileage and tip income. So keep a log of your activities as they occur.
  • Wait to file. To meet the IRS definition of contemporaneous, the receipt or acknowledgement must be received the earlier of either when you file your tax return or the due date (including extensions) of your tax return. This is particularly true with charitable contributions. So if you want to play it safe, do not file until all documentation is in hand.

3. Employee Documents

If you have any employees, you’ll need to have their W-2 forms in order to file your taxes. You’ll also need to withhold taxes from their paychecks throughout the year.

4. Records of Any Assets or Property You Own

You’ll need to have receipts for any capital expenditures, such as equipment or property purchases. Assets or property can include everything from your house or car to investments like stocks and bonds.

checklist for tax documents

The IRS will require you to report any changes in your assets or property during the year, and if you don’t have accurate records, you may end up paying more taxes than you owe.

5. Previous Tax Documents

It never hurts to have copies of your filed tax returns from previous years on hand. 

By following this checklist and keeping meticulous records throughout the year, you can save yourself a lot of headache – and money – come tax time.

Tax Preparation Services

Minton CPAs & Associates has been providing tax services to the Hampton Roads region for over 30 years. We have a team of highly qualified and experienced CPAs who are experts in tax preparation. 

We also offer a wide range of services including individual and business tax preparation, bookkeeping, payroll, and financial planning. We are dedicated to providing our clients with the best possible service and advice. Contact us today to schedule a consultation – 757-546-2870.