Are you collaborating with a tax accountant to file your business or personal returns? Are you unsure what documentation you should provide in advance of scheduled meetings to make the process as efficient as possible? While your specific situation may vary, below you’ll find information about standard documents your accountant needs to prepare your personal or business tax returns.
Let’s start with the basics: identification. When filing a personal return, your accountant will need your full legal name, address, Date of Birth (DOB) and Social Security Number (SSN). The same information will be needed for your dependents. You should also provide your Identity Protection PIN (IP PIN), which is a six-digit number that, while optional, prevents another from filing a return using your SSN. Further, your accountant should be given a copy of last year’s (or your most recent) tax return to use as their guide and to identify changes in your financial situation.
Next, you’ll need to report on any income generated within the prior year. If you were employed at any time during the tax year, provide your Form W-2. If you worked in a freelance capacity or as an independent contractor, provide the Form 1099-MISC provided by the payor. While working with your accountant to file your personal return, you’ll need to provide copies of financial statements related to any additional income you earned in the tax year. Whether investment returns, social security checks, property sales, HSA distributions, unemployment payments, your accountant will need to see all documents related to income – not just your Form W-2 and/or Form 1099-MISC.
You should also provide your tax accountant with any documents pertaining to deductions. For example, real estate holdings can be a source of deductions, as well as automobile donations to tax-exempt organizations, student loan interest payments, and more.
Finally, any expenses should be documented so that your accountant can accurately calculate any deductions/credits you may be eligible to receive. This includes any invoices, bills, receipts, student loan payments, childcare costs, contributions to charities, and more. When it comes to filing a tax return, and accounting for expenses, you’d rather be over-prepared and come with too much documentation instead of too little.
Similar to personal returns, a business tax return requires certain identification as well. Provide your accountant with: (1) the Social Security Numbers (SSNs) for you, your spouse, and your dependents, (2) your Employer Identification Number (EIN), (3) the addresses of your home and business, and (4) your business’ name and entity type. You should also provide your accountant with the previous year’s business return.
You should also provide your accountant with certain financial statements so that they may better understand your business’ financial wellbeing and ensure accuracy while preparing the current year’s return. A few good starting points would be to provide your business’ Balance Sheet, Cash Flow Statement, Profit and Loss Statement, and Income Statement. Your accountant should also be apprised of any capital assets that you’ve bought, sold, or traded during the tax year. Such assets might include: buildings, equipment, land, patents, copyrights, trademarks, or company vehicles.
Next, you will also need to account for loans and income records. It’s important that your accountant understands and can account for the ways in which you fund your business and the income you make. You should provide documentation that supports any loans or grants, including receipts of funds, payment records, and reimbursements. Documentation regarding the income your business generated may include company bank statements, sales invoices, and deposit slips you accrued over the year. Any income earned from investments (e.g. real estate, stocks, bonds) should also be reported to your accountant.
Any accountant you choose to partner with to file your business tax return will also need information/documentation about your business expenses. This includes any bills you paid during the tax year, recent credit card statements, and receipts for business purchases. Before your tax meeting, you should confer with your accountant to determine if they’d prefer you bring the original receipts for their review or just a summary report of your expenses.
Further, when you work with an accountant to file your business return, one of the greatest advantages is their knowledge about deductions you may qualify for. Be prepared to provide receipts for business travel expenses, utilities payments, charitable contributions, marketing expenses, health insurance costs, legal fees, and more. If you have company vehicles, provide mileage logs for each vehicle. If you work from home, you may be able to deduct “home office expenses”.
Lastly, a business tax return will also require information regarding employee payroll. To that end, provide your accountant with your employees’ names and SSNs, as well as how your employees are classified (i.e. full-time, part-time, or contractors). Your accountant will also need any W-2s, W-3s, and 1099-MISCs you have on file for the tax year.
While not exhaustive, the above can serve as your guide and reference as you prepare to share relevant documents with your tax accountant this upcoming tax season. If you have any questions about what we’ve covered here or if you need assistance filing your next tax return, feel free to reach out to us and speak with one of our experienced accountants today.
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