Whether you report business income on your personal return or file a separate return for a partnership or S corporation, the return is only as good as the records behind it. Gathering everything up front saves time, cuts down on back-and-forth with your preparer and helps make sure nothing is missed.
Income records
- Sales reports, invoices and deposit records for the year.
- Any 1099 forms you received from clients, payment apps or card processors.
- Records of cash and check payments that may not appear on any form.
Keep in mind that business income is generally reportable whether or not you received a form for it.
Expense and banking records
- Bank and credit card statements for every business account.
- Receipts and bills for business expenses, organized by category if possible.
- Payroll reports, W-2s issued and payroll tax filings, if you have employees.
- Invoices or closing papers for equipment, vehicles, furniture and other larger purchases.
- Loan statements showing interest paid.
Vehicle and home office
If you drive for business, bring a mileage log showing dates, destinations, business purpose and miles. Check the IRS website for the current standard mileage rate, or keep actual vehicle expense records. If you work from home, note the size of your office space and your whole home, plus rent or mortgage interest, utility and insurance records.
Tax and entity documents
- Last year's tax return, which helps with carryovers and consistency.
- Records of estimated tax payments, with dates and amounts.
- Your EIN confirmation letter from the IRS and entity formation documents.
- Schedule K-1s you received from partnerships or S corporations.
- Sales tax returns and records, if you collect Illinois sales tax.
- Any IRS or Illinois Department of Revenue notices from the year.
What differs by business type
Sole proprietors and single-member LLCs
Business income and expenses are usually reported on Schedule C with your personal return, unless the LLC has elected a different tax treatment. That means personal documents, such as W-2s and mortgage statements, belong in the same package.
Partnerships, multi-member LLCs and S corporations
These businesses generally file their own return, such as Form 1065 or Form 1120-S, and issue K-1s to owners. Expect your preparer to ask for a balance sheet, records of owner contributions and distributions and, for S corporations, owner wages paid through payroll.
If your records are scattered, catch-up bookkeeping can turn a box of paperwork into organized books. Our simple bookkeeping checklist helps you stay organized all year.
This article is general information, not tax advice, and the right list depends on your situation. If you'd like help with business tax preparation and planning in Tinley Park or nearby, schedule a free initial consultation by calling or texting (708) 232-3003.
