How to Prepare for Tax Season as a Small Business Owner

Step 1 — Close the books for December

• Reconcile every bank, credit card, and loan account through 12/31
• Categorize the last month of transactions
• Book year-end journal entries (depreciation, accruals, owner draws)
• Lock the prior year so categories stop drifting

Step 2 — Pull the documents your CPA will ask for

• Year-end P&L, balance sheet, and general ledger
• Bank, credit card, and loan statements (12/31 balances)
• Payroll reports (W-2s, W-3, 941s) and 1099s filed
• Asset purchases over $2,500 with invoices
• Vehicle mileage log and home office square footage
• Health insurance, retirement, and HSA contributions

Step 3 — Run a deduction sweep

Go category by category through the deduction checklist before your CPA appointment. The categories owners miss most: software subscriptions paid on personal cards, mileage, home office, education, business gifts, and bank/merchant fees.

Step 4 — Decide quarterly and entity questions early

• Confirm the Q4 estimated payment was made by January 15
• Project next year's safe-harbor and adjust withholding/estimates
• Revisit S-Corp election if net profit cleared the break-even line
• Plan owner pay and distributions for the new year

Step 5 — Send everything in one organized package

CPAs price (and prioritize) clients partly on how organized the file arrives. One folder, clearly named, with the P&L, balance sheet, payroll summary, 1099 list, and bank reconciliations beats five emails of attachments — and usually beats the deadline.